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Park East Terrace Cooperative Apartments, Inc. v. Lan Associates

Superior Court of New Jersey, Appellate Division

August 27, 2013

PARK EAST TERRACE COOPERATIVE APARTMENTS, INC., Plaintiff-Appellant,
v.
LAN ASSOCIATES, Defendant-Respondent.

NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION

Argued May 20, 2013

On appeal from Superior Court of New Jersey, Law Division, Passaic County, Docket No. L-1410-10.

Scott B. Piekarsky argued the cause for appellant (Piekarsky & Associates, LLC, attorneys; Mr. Piekarsky, of counsel; Mr. Piekarsky and Mark R. Rafo, on the briefs).

Joseph M. Suarez argued the cause for respondent (Suarez & Suarez, attorneys; Mr. Suarez, of counsel; Anazette W. Ray, on the brief).

Before Judges Graves, Ashrafi and Espinosa.

PER CURIAM.

Plaintiff Park East Terrace Cooperative Apartments, Inc. (Park East), filed a complaint against defendant LAN Associates (LAN) in March 2010, alleging breach of contract and negligence based upon LAN's failure to discover the existence of an underground storage tank in 1994 and "abandonment" of the project. Park East appeals from an order that granted summary judgment to LAN on statute of limitations grounds and failure of proof as to damages.[1] Because we conclude that Park East's claims were time-barred, we affirm and need not address its arguments regarding damages.

Park East is a cooperative residential housing association for a seven-building apartment complex in Paterson. In the summer of 1993, Park East discovered oil seeping through the boiler room floor in one of its apartment buildings, Building #6. An investigation conducted by Recon Environmental Systems (Recon) determined that the source of the seeping fuel oil was the #6 underground fuel oil storage tank (the #6 tank), which was believed to have been removed and replaced by the #2 underground fuel oil tank (the #2 tank) in 1970. Recon reported the contamination to the New Jersey Department of Environmental Protection (DEP). Park East then retained LAN to conduct a remedial investigation.

LAN submitted a proposal to Park East for three identified tasks in October 1993. The first task was to perform soil borings and collect samples to determine the extent of the seepage and whether there was groundwater contamination. The second task was to submit a remediation plan with recommendations to DEP based upon this investigation. In describing this task, LAN noted the need for further investigation regarding the underground tanks:

With regard to the underground tanks, the history of the #6 fuel oil tank must be further investigated. If this tank is determined to be the source of the contamination, its disposition must be documented to [DEP]. Based on our inspection of the site, no evidence of the tank remains. It is not known if the tank was abandoned in place or removed when the #2 fuel oil tank was installed. LAN Associates will attempt to document the disposition of this tank by investigating city building records and interviewing tenants.

[(Emphasis added).]

The third identified task concerned the #2 tank. LAN noted that it was more than twenty years old, "the expected useful life for an underground steel storage tank." Because testing would be costly and would "most likely result in an indication that a leak is present[, ]" LAN recommended its removal. LAN's proposal further stated that, upon completion of the project, it would file a report with DEP.

Park East authorized LAN to perform the first two proposed tasks, but not the third. Accordingly, the #2 tank was left undisturbed. As it turned out, documentation of the removal of the #6 tank could not be located and, in fact, it had been abandoned in place when the #2 tank was installed more than twenty years earlier. It was only when the #2 tank was removed some time later that the #6 tank was discovered.

Despite the language in LAN's proposal regarding the third task, Park East claims that it declined to approve this task because LAN "submitted in writing on multiple occasions that there was not another tank requiring removal at the site." However, LAN's reports do not support this characterization.

In its October 1993 proposal, LAN explicitly noted the uncertainty that existed regarding the disposition of the #6 tank. As noted above, LAN cautioned that it was unknown "if the tank was abandoned in place or removed when the #2 fuel oil tank was installed." It noted the need for further investigation and for documentation of the disposition to DEP if the #6 tank was determined to be the source of the contamination.

After completing the tasks approved by Park East, LAN submitted a second proposal to Park East in April 1994 to perform a supplementary investigation to determine if the #6 tank was present at the site. Park East approved this proposal and LAN performed the proposed services.

N.J.A.C. 7:26E-4.9 requires "[t]he person responsible for conducting the remediation" to prepare a remedial investigation report (RIR) that presents and discusses the information required to be identified or collected and to submit the report within the applicable regulatory timeframe. As the party responsible for remediation, Park East was required to submit an RIR that conformed to applicable regulations. LAN submitted an RIR on Park East's behalf to DEP in September 1994.[2]

In the RIR, LAN stated it had "been reported that the #6 fuel oil tank was removed and replaced with the existing #2 fuel oil tank in 1970[, ]" and that "the black oily substance is believed to have resulted from [that] previously removed . . . tank." Once again, LAN noted that "no documentation has been discovered regarding the removal of the #6 fuel oil tank." LAN reported,

Because records of tank removal could not be located, an investigation was performed to document that the former #6 fuel oil underground storage tank has been removed from the property. A magnetic locator was used to determine if there was a second tank present. However, the presence of the existing tank hindered the effectiveness of the investigation.
A test pit was excavated on May 5, 1994, to confirm that the original tank, identified as the source of the contamination based on the oil encountered in the soils, was removed. Although several tenants and representatives of Park East Terrace indicated the tank had been removed, no documentation exists. . . .
The excavation began by following the existing supply and return lines from the point of entry into the basement, out toward the tank. . . . The depth of the excavation was approximately eight feet below grade, far in excess of the typical amount of cover for an underground tank. The only piping encountered was that which runs to the existing #2 fuel oil tank. No other piping or pipe branches to an alternate location were encountered. The soil encountered was a very gravely loamy sand which was cautiously caving-in. This restricted the depth of excavation to 8' below grade. Based on the test pit program, as well as the fact that a number of borings throughout the area did not encounter any underground hindrances, it was concluded that the source of the contamination, the former #6 oil tank, is no longer present.

[(Emphasis added).]

The RIR reported a limited and defined area of contamination that was not migrating beyond the building or "impacting the down gradient groundwater quality at the site." LAN recommended that "the free product located along the building foundation" be recovered and disposed of appropriately. The RIR represented that the "two existing monitoring wells will be monitored . . . on a quarterly basis" and that a "Remedial Action Workplan will be prepared in accordance with the applicable sections of N.J.A.C. 7:26E."

On January 25, 1995, DEP sent Park East a letter[3] stating that it had been "informed of a suspected release of hazardous substances" on Park East's property. DEP offered Park East "the opportunity to conduct cleanup activities . . . with the Department's oversight" pursuant to the Voluntary Cleanup Program by entering into a Memorandum of Agreement. DEP stated that if Park East declined this offer, it would still be responsible for cleaning up the site in accordance with the Department's "Technical Requirements for Site Remediation" (Technical Requirements), N.J.A.C. 7:26E-1 to -8.7. It further explained that if Park East chose not to participate in the Voluntary Cleanup Program, "this matter will remain as an open case with the Department . . . and when the Department determines [the] case to be a priority and resources become available . . . the Department will conduct the cleanup and initiate actions to recover costs incurred." Park East did not respond to this letter and, as explained in the DEP letter, the matter remained an open case, with no further action taken until 2008.

Park East claimed that "no one at Park East ever remembers receipt of" DEP's January 25, 1995 letter. However, when Janice Northrop (Northrop), who served as a Park East Board member from 1991-1994 and then again from 2003-2009, was confronted with this letter at her deposition, she testified that she "vaguely remember[ed] seeing this document[, ]" and that she had likely received it from Jack Miller (Miller), who was the manager of Park East at the time.

Between 1994 and 2008, no further investigation or remedial actions were taken at the site. In June 2008, DEP sent a second letter, addressed to "Park East Terrace c/o Jan Northrup [sic], registered agent." The letter reflects that copies were sent to the Paterson Municipal Clerk, the Paterson Construction Officer, and "Kristin Pointin-Hahn, Chief, BCAIN." Again, there is no indication that LAN was copied on the letter.

DEP's June 2008 letter states that "[t]he Department has documented the release of hazardous substances at the Park East Terrace site, " and that it had notified Park East by letter dated January 25, 1995 "of the on-site contamination" and of "the opportunity to enter into a Memorandum of Agreement with the Department to conduct the required investigation/remediation of the contamination at the site[.]" The letter noted that the investigation and remediation had not been completed and that "[a] remedial investigation and/or remedial action workplan concerning the tank removal activities must be submitted to the Department."

Park East contacted LAN regarding DEP's June 2008 letter. LAN submitted a new proposal in July 2008 and Park East agreed to retain LAN for the proposed investigation and remediation services. After conducting the proposed activities, LAN sent an updated RIR to DEP in January 2009, which stated that free oil was present in the soil and groundwater, and recommended that the #2 tank be removed, along with all oil-contaminated soil. LAN stated it did not believe the #2 tank was the source of the oil contamination, but that its removal would allow residual oil likely located beneath it to be removed. LAN also recommended that the existing monitoring wells be re-developed or replaced.

Park East retained Lombardo Environmental, Inc. (Lombardo) to remove the #2 tank in accordance with LAN's recommendation. During the removal of the #2 tank in December 2009, Lombardo discovered the existence of the #6 tank, the tank that was reportedly removed in 1970. Lombardo removed both tanks and collected and tested soil samples, which proved to be contaminated. Additional remediation work was performed by Groundwork, Inc. (Groundwork) and Handex Consulting & Remediation, LLC (Handex) based upon Lombardo's recommendations.

The trial judge granted LAN's motion for summary judgment based upon the statute of limitations and also because there was insufficient proof of Park East's damages. Park East filed a motion for reconsideration, which was denied by the trial court.

In its appeal, Park East argues that, because it did not receive sufficient notice of LAN's failure to properly remediate the site until 2008, its action was not barred by the statute of limitations. We are unpersuaded by this argument. Concerning damages, Park East argues that the burden of proof regarding the apportionment of damages should be shifted to LAN and that its proof of damages was sufficient to withstand summary judgment. Because we affirm the order dismissing the complaint on statute of limitations grounds, we need not address the arguments regarding damages.

I.

We apply the same standard in our review of an order granting summary judgment as that employed by the trial court. Bauer v. Nesbitt, 198 N.J. 601, 605 n.1 (2009) (citing R. 4:46-2(c); Brill v. Guardian Life Ins. Co. of Am., 142 N.J. 520, 540 (1995)). Because the issue here -- the application of the statute of limitations -- is a question of law, our review is de novo. Selective Ins. Co. of Am. v. Hudson E. Pain Mgmt., 210 N.J. 597, 605 (2012).

II.

Park East's claims against LAN are subject to a six-year statute of limitations. N.J.S.A. 2A:14-1. Although Park East acknowledges that such a cause of action generally "accrues when an 'injury' is sustained as the result of the action of another[, ]" see Rosenau v. City of New Brunswick, 51 N.J. 130, 137 (1968), and that this is usually "the date on which the tortious conduct actually took place[, ]" see Beauchamp v. Amedio, 164 N.J. 111, 117 (2000), it contends that its claims should not have been time-barred because it was entitled to the application of the discovery rule.

The discovery rule will postpone the accrual of a cause of action "when a plaintiff does not and cannot know the facts that constitute an actionable claim." Grunwald v. Bronkesh, 131 N.J. 483, 492 (1993). The discovery rule focuses on the injured party's knowledge regarding "two key elements, injury and fault." Ibid. (quoting Lynch v. Rubacky, 85 N.J. 65, 70 (1981)). The discovery rule does not delay the accrual of a cause of action indefinitely, however. "The limitations period begins to run when a plaintiff knows or should know the facts underlying" the elements of its claim. Id. at 493 (emphasis added) (citing Burd v. N.J. Tel. Co., 76 N.J. 284, 291-92 (1978)).

Park East argues it lacked the requisite awareness of its injury before the statute of limitations expired because it did not receive notice of LAN's "failure to fully and properly remediate and the resulting enhancement of damages" until 2008. It further argues that, "[a]t a bare minimum, " it should have been afforded a hearing pursuant to Lopez v. Swyer, 62 N.J. 267, 275 (1973). As "the party claiming the indulgence of the rule, " Park East bears the burden of proving the discovery rule is applicable here. Id. at 276. It has failed to do so.

It is undisputed that, in 1993, Park East was aware that an oily substance was seeping from the floor of a boiler room, and that, as a result of the investigation conducted by Recon, DEP was notified of the issue. As the owner of the premises, Park East is charged with knowledge -- from the outset -- that it was required to comply with DEP regulations concerning remediation and reporting. It engaged LAN to perform discrete services, which included the submission of the September 1994 RIR that set forth LAN's assessment of the contamination, admission that the disposition of the #6 tank was undocumented, and recommendations for remediation. Park East never authorized LAN to perform the recommended remediation activities. The January 1995 letter from DEP established the need for further investigation and remediation at the site. Based upon these facts, Park East had sufficient knowledge that the remediation services performed by LAN in 1993-94 did not satisfy DEP requirements no later than January 1995. To be timely, any claim based upon an alleged deficiency in the services performed by LAN had to be filed no later than January 2001, unless the discovery rule applied.

Park East's initial argument for the application of the discovery rule rests upon its claim that it did not receive the 1995 letter from DEP. In opposition to LAN's summary judgment motion, it presented a certification from Fern Libow, in which Libow stated, "I do not recall [Park East] receiving any letter or notice after [LAN] left the site until 2008." Libow was a Park East Board member in February 2012, but was not on the Board at the time the January 1995 letter was sent. Libow's recollection differs from that of Northrop, who served on the Board from 1991-1994 and then again from 2003-2009.[4] Northrop testified that she "vaguely remember[ed] seeing" the 1995 DEP letter, and that she likely received the letter from Miller, the manager of Park East at the time.

Even if we accept Libow's statement over that of Northrop in deference to the principle that all favorable inferences are to be drawn in Park East's favor, it is insufficient to create a triable issue of fact that would defeat summary judgment. At best, Libow can only speak to her own recollection. She cannot state definitively that the January 1995 letter was not received.

Moreover, Park East cannot escape the fact that it knew as early as Recon's report to DEP in 1993 that it was required to comply with DEP requirements triggered by the oil seepage. Park East was obligated to exercise reasonable diligence to discover the facts underlying its claim. See Grunwald, supra, 131 N.J. at 494. It cannot evade that responsibility by assuming an ostrich-like stance and simply disavowing the statements made in the RIR submitted on its behalf.

Park East further argues that LAN's "failure to remediate as well as communicate with both [DEP] and Park East regarding the 1995 letter" constitutes the type of conduct that renders it inequitable for LAN to be allowed to avail itself of the statute of limitations defense. See Lopez, supra, 62 N.J. at 275 n.2. As part of this argument, Park East suggests that the January 1995 letter was received by LAN in 1995, based upon the fact that a copy of the letter was present in LAN's files in 2008, after discovery was commenced in this case. Park East contends that, because LAN purportedly had a copy of DEP's letter in 1995, it was aware that further remediation was needed to attain compliance with the DEP requirements but did nothing and failed to communicate this need to Park East. This argument lacks both factual and legal support.

As a preliminary matter, the fact that a copy of the 1995 letter was present in LAN's files thirteen years later does not prove that LAN received a copy of the letter in 1995. The 1995 letter was neither addressed to nor copied to LAN. No evidence has been presented that it was forwarded to LAN in 1995 by anyone. And, since Park East did not authorize any of the work recommended by LAN in the September 1994 RIR, there was no further interaction between the two regarding this work in 1995. It is undisputed that a copy of the 1995 letter was an attachment to the June 2008 letter sent by DEP, and that Park East referred the concerns in that letter to LAN thereafter. The premise that LAN received the letter in 1995 therefore lacks credible support in the record.

Since Park East declined to authorize the activities that would have led to an earlier discovery that the #6 tank was abandoned in place, LAN had no duty to voluntarily undertake that task or to take any action, even if it received the DEP letter -- addressed to Park East -- in 1995. The line of cases, starting with Fernandi v. Strully, 35 N.J. 434, 449-50 (1961), in which a defendant's conduct rendered reliance upon the statute of limitations defense inequitable, concern defendants who took affirmative steps to conceal the fact that a plaintiff's injury was caused by the defendant's own negligence. See, e.g., Fernandi, supra, 35 N.J. at 436-38, 445; Lopez, supra, 62 N.J. at 275 n.2.

That was not the case here. The 1995 letter mirrored the very disclosures and recommendations LAN made in the September 1994 RIR. There is no evidence that LAN took any action to conceal information from Park East that would have impaired its ability to learn the facts underlying its claim on a timely basis with the exercise of reasonable diligence. This argument therefore fails.

Affirmed.


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