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Vashisht v. State of New Jersey Dep't of Environmental Protection

SUPERIOR COURT OF NEW JERSEY APPELLATE DIVISION


January 7, 2009

AVINASH VASHISHT AND MAGIC PETROLEUM CORPORATION, PLAINTIFFS-APPELLANTS,
v.
STATE OF NEW JERSEY DEPARTMENT OF ENVIRONMENTAL PROTECTION, DEFENDANT-RESPONDENT.
NEW JERSEY DEPARTMENT OF ENVIRONMENTAL PROTECTION, DIVISION OF SOLID & HAZARDOUS WASTE, PETITIONER-RESPONDENT,
v.
MAGIC PETROLEUM CORPORATION, RESPONDENT-APPELLANT.

On appeal from the Superior Court of New Jersey, Law Division, Monmouth County, Docket No. L-0389-06 (A-1641-06T2) and from a Final Decision of the Commissioner of Department of Environmental Protection, Reference No. NJL 6000 58515-009246 (A-2910-06T2).

Per curiam.

NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION

Argued: December 10, 2008

Before Judges Cuff, Fisher and Baxter.

In this consolidated appeal, we review a final decision of the Commissioner of the Department of Environmental Protection (DEP) that assessed a $75,000 penalty because Magic Petroleum Corporation (Magic) had repudiated an Administrative Consent Order (ACO) executed in 1999. The Commissioner also continued the requirement that Magic remediate the site. We also review an order dismissing a complaint filed in the Superior Court, Law Division, by Avinash Vashisht and Magic in the midst of the administrative enforcement proceeding. We affirm.

On November 24, 1999, Magic and DEP executed an ACO that required Magic to remediate contaminated ground water on the site of a gasoline station. The ACO contemplated that Magic and its corporate officer, Vashisht, would file an application for funding with the New Jersey Economic Development Authority (EDA) to effectuate the remedial work. The ACO provided that the order would be null and void if Magic failed to obtain financing.

Vashisht and his wife submitted a personal financial statement in conjunction with the funding application. EDA granted the loan application, but required Vashisht and his wife to guarantee the loan. Vashisht's wife refused to do so and Vashisht and Magic rejected the loan.

When Magic failed to meet its obligations, DEP issued an Administrative Order/Notice of Civil Administrative Penalty Assessment. Magic appealed and this enforcement action was transferred to the Office of Administrative Law (OAL) as a contested case. On November 1, 2006, an administrative law judge (ALJ) issued an Initial Decision. He held that the ACO was not null and void because Magic had rejected available financing and had failed to fulfill its obligations under the ACO. He recommended aggregate penalties totaling $75,000.

Before completion of the OAL proceedings, Vashisht and Magic filed a complaint in Superior Court, Law Division, in which they alleged that the November 1999 ACO was a contract between DEP and them, that DEP breached this contract and that DEP also breached the duty of good faith and fair dealing. On October 4, 2006, Judge Perri dismissed the complaint. She held that the complaint was untimely because Vashisht and Magic failed to notify DEP of its breach of contract claim as required by N.J.S.A. 59:13-5. Alternatively, the judge held that the Law Division lacked jurisdiction to intervene in on-going administrative proceedings or to review a final enforcement decision by an agency. Vashisht and Magic appealed.

On December 18, 2006, the DEP Commissioner adopted the Initial Decision rendered by the ALJ. Magic filed a timely appeal from this order.

On appeal, Magic argues that the December 2006 final order issued by DEP is erroneous because the ALJ should not have utilized the summary disposition procedure and because the ACO was null and void. Magic also contends the ALJ should have allowed a deposition of a DEP case manager. Finally, Magic argues that the penalties assessed by DEP are unreasonable and unwarranted. Vashisht and Magic also argue that the Law Division had jurisdiction to entertain their breach of contract claim; therefore, Judge Perri should not have dismissed their complaint.

We have thoroughly reviewed the administrative record and are satisfied that there is no basis to intervene. The ALJ properly utilized the summary disposition procedure, N.J.A.C. 1:1-12.5(b), and the decision of DEP is supported by sufficient credible evidence in the record as a whole. R. 2:11-3(e)(1)(D). As to the central factual issue, whether the ACO remained operative when Vashisht rejected the terms of the proffered loan, we have no doubt that this ruling is correct. Magic obtained financing that contained standard and reasonable terms. Magic's unilateral action of rejecting available financing did not alter its obligation to remediate the site.

Judge Perri also correctly held that the Law Division lacked jurisdiction to adjudicate the controversy between Magic and the agency. Magic and Vashisht suggest that this dispute regarding the financing terms and any obligation assumed by the ACO could not be addressed in the agency adjudication or proceeding. However, DEP has adopted a dispute resolution procedure for those involved in a remediation effort. N.J.A.C. 7:26C-1.4(a). Thus, Magic had a ready remedy within the agency. The availability of this administrative remedy undermines appellants' argument that the trial court was the only forum available to them to address disputes concerning obligations imposed by DEP.

We, therefore, affirm the December 18, 2006 Final Decision of the DEP Commissioner and the October 4, 2006 order dismissing the Law Division action.

Affirmed.

20090107

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