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Hi Tech Trans, LLC v. Avanti Demolition & Carting Corp.

May 8, 2009

HI TECH TRANS, LLC, PLAINTIFF-APPELLANT,
v.
AVANTI DEMOLITION & CARTING CORP., AND VICTOR SANTOS, DEFENDANTS-RESPONDENTS, AND TONY GOMES, DEFENDANT.



On appeal from the Superior Court of New Jersey, Law Division, Essex County, Docket No. L-8589-06.

Per curiam.

NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION

Argued: January 14, 2009

Before Judges Axelrad, Parrillo and Lihotz.

Plaintiff, Hi Tech Trans, LLC (Hi Tech) appeals from summary judgment dismissal of its collection complaint for solid waste dumping fees based on its failure to obtain proper licensing in accordance with state environmental regulations during the term of the agreement. We affirm.

Hi Tech is engaged in the transportation of waste products from various loading terminals to landfills and treatment facilities. On November 6, 2000, it entered into a license agreement with the Canadian Pacific Railroad (CPR) whereby Hi Tech would develop and operate a construction and demolition (C&D) debris bulk waste loading facility at the Oak Island Rail Yard (OIRY) in Newark. By the terms of the agreement, Hi Tech's use of the premises was limited to the transfer of C&D waste products that arrived at the facility by truck and were discharged onto machinery provided by Hi Tech and loaded directly to rail cars operated by CPR for ultimate transport to out-of-state disposal facilities. The agreement required Hi Tech to "obtain all permits or exemptions... necessary for the construction, use and operation of the facility" prior to commencement of any operations and to "use the Premises in strict conformance with all applicable rules, regulations and ordinances of federal, state and municipal authorities."

Hi Tech commenced operations at the facility on September l7, 2001. In April 2003, Hi Tech and Avanti Demolition & Carting Corp. (Avanti) entered into an agreement for Avanti to dump its solid waste at the High Tech transload facility for a fee. From April 28 to June 9, 2003, Avanti brought about 2,600 tons of C&D material to the facility. Avanti issued a series of checks to Hi Tech in payment of its outstanding fees but subsequently placed a stop payment order on the checks, leaving a balance due of $258,174.65.

Pursuant to an April l6, 2003 site visit, on or about May 28, 2003, the New Jersey Department of Environmental Protection (NJDEP) issued an Administrative Order citing Hi Tech for violating regulations under the Solid Waste Management Act (SWMA), specifically, operating a solid waste disposal facility without a permit, in violation of N.J.A.C. 7:26-2.8(f), and engaging in the commercial disposal of solid waste without having obtained a Certificate of Public Convenience and Necessity, in violation of N.J.A.C. 7:26H-1.6(a). No penalty was assessed. However, Hi Tech was ordered to cease solid waste operations at the OIRY within twenty days. On June l7, 2003, Hi Tech requested an administrative hearing and sought a stay from the NJDEP pending its resolution. On June 30, 2003, the NJDEP granted Hi Tech emergent relief and transferred the case to the OAL as a contested matter.

On August l3, 2003, the administrative law judge (ALJ) issued an initial decision in which he accepted Hi Tech's argument that it was involved in transportation by railroad because its transfer station located within the OIRY served the railroad in fulfilling its task as a common carrier and was thus subject to the exclusive jurisdiction of the Surface Transportation Board (STB). Dep't. of Envtl. Prot. v. Hi Tech Trans, LLC, OAL Docket No. ESW 05815-03, initial decision, (August l3, 2003); see 49 U.S.C.A. § 10501(b) (under the Interstate Commerce Commission Termination Act (ICCTA), the STB has exclusive authority over "transportation by rail carrier" and its regulation of rail carriers preempts state regulation with respect to rail transportation). Accordingly, he recommended the DEP order be dismissed as preempted by federal law. Ibid. The Commissioner reversed, adopting the reasoning of the STB, infra, and concluding that Hi Tech was not a rail carrier, and its relationship with CPR was that of a shipper with a carrier; thus, Hi Tech's facility was not subject to the exclusive authority of the STB and NJDEP's authority was not preempted. Dep't. of Envtl. Prot. v. Hi Tech Trans, LLC, OAL Docket No. ESW 05815-03, final decision, (September 29, 2003).

Accordingly, Hi Tech was ordered to immediately cease and desist its operations at the OIRY facility. Ibid. We affirmed NJDEP's final determination. Dep't. of Envtl. Prot. v. Essex County Utilities Authority, No. A-929-03-T3 (App. Div. June 11, 2004). The Supreme Court denied Hi Tech's petition for certification and dismissed its appeal. Dep't. of Envtl. Prot. v. Hi Tech Trans, LLC, 181 N.J. 543 (2004).

On June l7, 2003, Hi Tech also filed a petition with the STB, raising substantially the same preemption argument and requesting a declaratory order that its facility was thus not subject to regulation by NJDEP. On August l4, 2003, the STB rejected Hi Tech's argument and denied the petition. Hi Tech Trans, LLC - Petition for Declaratory Order - Newark, NJ, STB Finance Docket No. 34192 (Sub-No. l).

After receiving NJDEP's Administrative Order, Hi Tech additionally filed a complaint and amended complaint in the United States District Court for the District of New Jersey against the NJDEP and its director, claiming it was a rail carrier under 49 U.S.C.A. § 10102(5), and seeking a declaration that state regulation of its facility was thus preempted by federal law. On June 16, 2003, the district court dismissed Hi Tech's complaint pursuant to abstention principles. The Third Circuit rejected Hi Tech's preemption claim and affirmed dismissal of its amended complaint. High Tech Trans, LLC v. New Jersey, 382 F.3d 295 (3d Cir. 2004).*fn1

On October l6, 2006, Hi Tech filed a complaint against Avanti seeking to collect the outstanding dumping fees.*fn2 Avanti moved for summary judgment, arguing the underlying agreement between the parties was void ab initio as a matter of public policy and thus unenforceable because of Hi Tech's failure during the term of the agreement to maintain proper licensure as required by the NJDEP.*fn3 Avanti relied on the SWMA and its regulations and the state and federal court holdings definitively establishing that Hi Tech's facility at the OIRY was subject to NJDEP's permit and licensing requirements. According to Avanti, in entering into the agreement, Hi Tech represented that it possessed all the permits and licenses required under state and federal law for the lawful operation of a transload facility and, as such, was an authorized receiver of Avanti's debris. Avanti claimed that, as reassurance, Hi Tech agreed to indemnify it for any damages it might incur for violations of state and local waste flow regulations. Avanti further claimed that in reliance upon these assurances, it began dumping solid waste at the subject facility. Avanti subsequently learned, however, that Hi Tech had not been properly licensed at any point in the parties' relationship and that Avanti had been made a party to a suit filed by the Essex and Union County Utilities Authorities seeking damages for the delivery of waste to Hi Tech's unlicensed facility. Essex County obtained a $3.5 million judgment against Avanti, which it claimed forced it out of business. Avanti further defended the fraud claim on the grounds that it stopped payment of the checks to off-set the resulting damage from Tech's refusal to honor the indemnification agreement.

In opposition, Hi Tech did not address the illegality of the contract resulting from the lack of NJDEP permits or the public policy issue of enforcing the agreement for dumping at an unlicensed facility. In its brief and at argument, Hi Tech sought denial of summary judgment based on: (1) earlier denials of summary judgment (on other grounds); (2) the inapplicability of the indemnification agreement and resulting lack of legal basis for Avanti to stop payment on the checks; and (3) material issues of fact surrounding the stop payment orders. As to the latter two issues, Hi Tech claimed that after the Essex County Utility litigation commenced, Avanti offered to settle the matter by agreeing to make weekly payments if Hi Tech let it resume dumping, and after Avanti dumped, it stopped payment on the checks. At argument there was no dispute that Hi Tech did not ...


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