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Public Service Electric and Gas Co. v. Newport Associates Development Co.

United States District Court, D. New Jersey

January 28, 2019

PUBLIC SERVICE ELECTRIC AND GAS COMPANY,, Plaintiff,
v.
NEWPORT ASSOCIATES DEVELOPMENT COMPANY and NEWPORT ASSOCIATES PHASE I DEVELOPERS LIMITED PARTNERSHIP,, Defendants. NEWPORT ASSOCIATES DEVELOPMENT COMPANY and NEWPORT ASSOCIATES PHASE I DEVELOPERS LIMITED PARTNERSHIP, Counterclaim and Third-Party Plaintiffs,
v.
PUBLIC SERVICE ELECTRIC AND GAS COMPANY, Counterclaim Defendant, and CONSOLIDATED EDISON COMPANY OF NEW YORK, Third-Party Defendant. PUBLIC SERVICE ELECTRIC AND GAS COMPANY, Crossclaim Plaintiff,
v.
CONSOLIDATED EDISON COMPANY OF NEW YORK, Crossclaim Defendant. CONSOLIDATED EDISON COMPANY OF NEW YORK, Counterclaim Plaintiff,
v.
PUBLIC SERVICE ELECTRIC AND GAS COMPANY, Counterclaim Defendant.

          OPINION

          KEVIN MCNULTY UNITED STATES DISTRICT JUDGE

         Counterclaim and Third-Party Plaintiffs, Newport Associates Development Company ("Newport Development") and Newport Associates Phase I Developers Limited Partnership ("Newport Phase One") (together, "Newport"), seek remedial, statutory, and punitive damages related to an alleged environmental contamination in the Newport Marina in Jersey City ("the Spill"). Newport, originally sued by Public Service Electric and Gas Company ("PSE&G") in connection with the Spill, brings claims against PSE&G as Counterclaim Defendant, and against Third-Party Defendant Consolidated Edison Company of New York ("Con Edison"). (Con Edison and PSE&G are referred to collectively as the "Utilities".).

         Newport seeks relief from the Utilities under both federal and state statutes. Under the federal Oil Pollution Act (the "OPA"), Newport seeks removal costs and statutory damages (count VIII); declaratory judgment (count IX); and contribution (count X). Under the New Jersey Spill Compensation 86 Control Act (the "Spill Act"), Newport seeks contribution and declaratory relief (count XIII). Under the Comprehensive Environmental Response Compensation and Liability Act of 1980 ("CERCLA"), Newport seeks response costs, contribution, and declaratory judgment (count XIV). Last, Newport seeks a citizen-suit injunction under the Hazardous Liquids Pipeline Safety Act ("HLPSA") (count XV). These counts are not implicated by the motion now before the Court.

         Against PSE&G alone, Newport brings claims for breach of an easement (count I), termination or modification of the easement (count VII), and indemnification under the easement (count XI). These counts are not implicated by the motion now before the Court.

         Against both Utilities, Newport brings claims for pre-Spill negligence (count II); negligence in responding to the Spill (count III); trespass (count IV); nuisance (count V); strict liability for ultrahazardous or abnormally dangerous activities (count VI); and indemnification under an access agreement (count XII).

         Before the Court is Con Edison's motion pursuant to Fed.R.Civ.P. 12(b)(6) to dismiss four of these counts: pre-Spill negligence (count II); strict liability for ultrahazardous or abnormally dangerous activities (count VI); trespass (count IV); and nuisance (count V). For the reasons discussed below, Con Edison's motion to dismiss is granted in part and denied in part.

         I. Summary [1]

         a. Background

         I focus here on the facts alleged in the amended third party Complaint that are relevant to the four counts targeted by the motion to dismiss.[2]

         i. The parties

         Newport Development is a New Jersey general partnership with its principal place of business in Jersey City, New Jersey. (A3PC ¶ 16). Newport Phase One is a New Jersey limited partnership with its principal place of business at the same address as Newport Development. (Id. ¶¶ 16-17). PSE&G is a New Jersey corporation with its principal place of business in Newark, New Jersey. (Id. ¶ 18). Con Edison is a New York corporation with its principal place of business in New York City. (Id. 19).

         ii. Installation of the cables

         The Utilities own and operate two 35OkV electric cables that transmit electricity from Jersey City, New Jersey, to Brooklyn, New York (the "Cables"). (A3PC ¶ 24). The Cables run overland from PSE&G's Hudson substation in Jersey City, under the Hudson River, overland through Manhattan, and then under the East River to Con Edison's Farragut substation in Brooklyn. (Id.). The Cables do not supply electricity to Newport's property or any other property in New Jersey. (Id.). Rather, the Cables supply electricity to Con Edison's customers in New York. (Id.).

         The first Cable, as well as the steel pipe for the second Cable, were installed in 1972. (A3PC ¶ 25). The second Cable was installed in 1982. (Id.). Both Con Edison and PSE&G participated in the design and construction of the Cables, as well as the maintenance and repair (or lack thereof) of the Cables. (Id. at ¶ 21). Among other agreements, the "1975 ICA" between Con Edison and PSE&G provided as follows: "In behalf of Con Edison and [PSE&G], Con Edison shall maintain the entire river crossing section of the [Cables]. All maintenance costs so incurred shall be shared equally by the parties hereto." (Id.).

         Con Edison never certified to PSE&G that construction of the Cables was substantially complete, never obtained a certificate of occupancy or similar document from any relevant government regulator, and never ceased performing services on the Cables, including the portion of the Cables owned by Con Edison. (A3PC ¶ 22). In Newport's view, these facts support an inference that Con Edison never relinquished its role with respect to the Cables.[3]

         Each electric Cable is seven miles long and is housed in a steel pipe with a 10-inch diameter. (A3PC at ¶ 26). The pipes are generally encased in coal tar and, except around the welds, concrete. (Id.). The pipes contain dielectric fluid, a refined petroleum product, to insulate the Cables. (Id.).

         The dielectric fluid circulates throughout the entire length of the Cables and through onshore storage tanks. (A3PC at ¶ 27). Over the years, the Utilities have from time to time added new dielectric fluid to the storage tanks to replace fluid that has leaked into the environment. (Id.).

         The Cables are designed to operate even while leaking, provided that additional dielectric fluid is pumped into the Cables to replace leaking fluid. (A3PC at ¶ 28). A pressure sensor, the sole system to detect leaks, is designed to sense only large leaks. The sensor may detect the existence of a leak, but not its location. The present Spill, which has been ongoing since at least October 2016, has not triggered the pressure sensor. (Id.).

         The Army Corps of Engineers (the "ACOE") and the New Jersey Department of Environmental Protection (the "NJDEP") issued permits for the Cables. The permits required a six-foot protective layer of crushed stone. (A3PC ¶ 29). The Utilities failed to install the required layer of crushed stone, at least along the hundreds of feet of the Cables in the vicinity of the Pier that have now been excavated or lanced. (Id.).

         iii. The Easement

         In 1986, Newport acquired a portion of the riverbed of the Hudson River, adjacent to Jersey City. The Cables pass over that portion of the riverbed. At the time Newport acquired the property, the Cables were already installed. (A3PCat ¶ 3l).

         On January 1, 1987, Newport and PSE&G entered into an easement agreement (the "Easement") that superseded all prior agreements between their predecessors in interest. (A3PC at ¶ 32). The Easement runs parallel to the Pier, approximately 5 to 35 feet north of the Pier, and is about 30 feet wide. (Id.).

         At the time the Easement was negotiated, PSE&G knew of the true risks of a leak, but failed to disclose them and affirmatively concealed them from Newport. (A3PC at ¶ 33). PSE&G did not disclose design flaws that increased the likelihood of leaks and decreased the likelihood of their detection. (Id.). PSE&G also did not disclose Cables' non-conformities to the permit conditions. (Id.). PSE&G also did not disclose pre-existing damage to Cables, including damage from contact with a tugboat propeller and barge-mounted crane. (Id.).

         iv. Maintenance, repair, protection, and replacements

         Following the design and installation of the Cables, Newport alleges, the Utilities continued to be reckless in (1) failing to properly maintain, repair, and protect the Cables (A3PC at ¶¶ 38-40); and (2) failing to replace the Cables despite the fact that they have exceeded their useful life. (Id. at ¶ 41-44).

         v. The Spill

         The Spill was discovered on October 3, 2016. (A3PC at ¶ 45). The Cables are the source of the Spill. (Id.).

         In July 2017, the Utilities' divers discovered the leak in the Cables which was the source of the Spill. (A3PC at ¶ 46). The leak was caused by a welding flaw, known as a lack-of-fusion defect. (Id.). The defective weld is located on an irregularly-spaced coupler. (Id. at ¶ 47).

         The Cables were fabricated in 20-foot segments. (A3PC at ¶ 47). In a land-based factory, pairs of 20-foot segments were welded together to form 40-foot segments. (Id.). Then, on a vessel in the river, 40-foot segments were welded together, and the Cables were dropped to the riverbed. (Id.). As a result, the Cables have regularly-spaced welds every 20 feet. (Id.). The defective weld, however, is not a regularly-spaced weld. (Id.). Rather, the defective weld is on one of three irregularly-spaced couplers, which appear to have been installed after a piece of pipe was "cut out" and replaced. (Id.). The written plans for the Cables do not include these irregularly-spaced couplers. (Id. at 48).

         vi. Damage from the Spill

         The Spill has polluted Newport's property. The response to the Spill has interfered with Newport's property and imposed substantial economic costs on Newport. (A3PC at ¶ 51). The Coast Guard, which has overseen the response to the Spill, determined that the Spill posed an imminent and substantial threat to the public health or welfare of the United States or the environment of the United States. Accordingly, the Coast Guard invoked its authority under the Clean Water Act to direct all federal, state, and private actions to remove the discharge and to mitigate or prevent the threat of the discharge. (A3PC at ¶ 52).

         On October 6, 2016, NJDEP issued a field directive to PSE&G finding PSE&G responsible for the Spill. (A3PC at ¶ 52).

         On November 17, 2016, the Coast Guard issued an administrative order directing Newport to, among other things, remove certain debris from the Easement area. (A3PC at ¶ 54). Newport complied with the Coast Guard's order. (Id.). In order to comply, Newport incurred and continues to incur additional costs. (Id.).

         Newport's costs have been increased by the Utilities' conduct since the spill. (DE 98, ¶¶ 55, 57, 59-63).

         b. Procedural history

         I write for the parties and so assume familiarity with the procedural history of this matter, including my previous filed opinion (DE 62). I highlight here some items particularly pertinent to these motions.

         On February 14, 2017, PSE&G filed an amended complaint against Newport. (DE 40).

         On March 14, 2017, Newport filed a motion to dismiss the amended complaint. (DE 43).

         On December 28, 2017, I filed an opinion (DE 62) and order (DE 63) granting in part and denying in part Newport's motion to dismiss.

         On February 9, 2018, Newport filed an answer to the amended complaint with a third-party complaint against Con Edison and a counterclaim against PSE&G. (DE 72).

         On April 13, 2018, PSE&G filed an answer to Newport's counterclaim with a crossclaim against Con Edison. (DE 81).

         On the same date, Con Edison filed a motion to dismiss certain counts in the third-party complaint. (DE 85).

         On May 21, 2018, Newport filed an amended answer to the amended complaint with a third-party complaint against Con Edison and a counterclaim against PSE&G. (A3PC).

         On June 11, 2018, PSE&G filed an answer to Newport's counterclaim with a crossclaim against Con Edison. (DE 99).

         On June 15, 2018, Con Edison filed a motion to dismiss the amended third-party complaint. (Mot. to Dismiss).

         On August 6, 2018, Newport filed a response in opposition to Con Edison's motion to dismiss the amended ...


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