MATTHEW P. TERRANOVA VS. GENERAL ELECTRIC PENSION TRUST (L-6691-15, MIDDLESEX COUNTY AND STATEWIDE) ( 2019 )

NOT FOR PUBLICATION WITHOUT THE
APPROVAL OF THE APPELLATE DIVISION
SUPERIOR COURT OF NEW JERSEY
APPELLATE DIVISION
DOCKET NO. A-5699-16T3
MATTHEW P. TERRANOVA,
KAREN L. TERRANOVA, and
APPROVED FOR PUBLICATION
NEW LAND HOLDINGS, LLC,
January 4, 2019
Plaintiffs-Appellants, APPELLATE DIVISION
v.
GENERAL ELECTRIC PENSION
TRUST, ATLANTIC RICHFIELD
CO., CHARLES BORIS, JR.,
CAROL BORIS, and EDWARD
WILGUCKI,
Defendants-Respondents,
and
U-HAUL OF NORTHERN
NEW JERSEY, INC., U-HAUL
INTERNATIONAL, INC.,
Defendants,
and
AMERCO REAL ESTATE
COMPANY,
Defendant/Third-Party
Plaintiff-Respondent,
v.
18 PETRO CORP. and PITSTOP
EXPRESS, INC.,
Third-Party Defendants.
______________________________
Argued October 3, 2018 – Decided January 4, 2019
Before Judges Fuentes, Vernoia and Moynihan.
On appeal from Superior Court of New Jersey, Law
Division, Middlesex County, Docket No. L-6691-15.
Amy E. Robinson argued the cause for appellants
Matthew P. Terranova, Karen L. Terranova, and New
Land Holdings, LLC (The Killian Firm, PC, attorneys;
Eugene Killian, Jr., on the brief).
Michael C. Falk argued the cause for respondents
General Electric Pension Trust and Atlantic Richfield
Company (Reed Smith LLP, attorneys; Michael C.
Falk, of counsel and on the brief; Robert P. Frank and
David G. Murphy, on the brief).
Elizabeth Callaghan Flanagan argued the cause for
respondents Charles Boris, Jr., Carol Boris and
Edward Wilgucki (Purcell, Mulcahy & Flanagan,
LLC, attorneys; Elizabeth Callaghan Flanagan, on the
brief).
David J. Mairo argued the cause for respondent
Amerco Real Estate Company (Chiesa Shahinian &
Giantomasi, PC, attorneys; David J. Mairo, Michael
K. Plumb, Thomas R. McCarthy (Consovoy McCarthy
Park, PLLC) of the Virginia bar, admitted pro hac
vice, and Caroline A. Cook (Consovoy McCarthy
Park, PLLC) of the Virginia bar, admitted pro hac
vice, on the brief).
A-5699-16T3
2
The opinion of the court was delivered by
MOYNIHAN, J.A.D.
Matthew P. Terranova, Karen L. Terranova and New Land Holdings,
LLC (collectively: plaintiffs), the owners of a commercial property long used
as a gas station, appeal from orders granting motions for summary judgment
filed by defendants General Electric Pension Trust and Atlantic Richfield
Company (collectively: GE defendants), Amerco Real Estate Company, 1 and
Charles Boris, Jr., Carol Boris and Edward Wilgucki (collectively: Boris
defendants). Plaintiffs allege defendants were dischargers liable pursuant to
the New Jersey Spill Compensation and Control Act (Spill Act), N.J.S.A.
58:10-23.11 to -23.24, for contribution toward the cost of clean-up and
removal of hazardous substances, N.J.S.A. 58:10-23.11f(a)(2)(a), based on:
the GE defendants' ownership and operation of the property from 1960 to
1973, during which "soil and groundwater contamination began in
approximately 1963" from three underground storage tanks (USTs ) designated
as "E1-E3"; the Boris defendants' ownership and operation of the property
1
The order granting summary judgment to Amerco indicates it was the
successor to defendant U-Haul Co. of Northern New Jersey, improperly pled as
U-Haul of Northern New Jersey, Inc. Plaintiffs' complaint asserts the
improperly-pled U-Haul defendant owned and operated the property from 1976
through 1980.
A-5699-16T3
3
from 1973 to 1976; and Amerco's ownership and operation of the property,
directly or by its predecessor in interest from 1976 to 1980 when Amerco sold
the property to plaintiffs. Plaintiffs argue the trial court's basis for granting
defendants' motions – the doctrine of judicial estoppel – should not be invoked
to preclude them from pursuing claims against defendants for remediation of
the property pursuant to the Spill Act "[b]ecause of the complexities of
environmental investigation [regarding discharges] and the broad remedial
purposes of the Spill Act"; they also contend "[j]udicial estoppel is not a
defense recognized by the Spill Act."
We cannot readily discern from the record the basis for the trial court's
decision. In their merits brief, the GE defendants, citing simply to their notice
of motion for summary judgment, contend they posed judicial estoppel and the
entire controversy doctrine as grounds for summary judgment. The notice of
motion, however, does not mention those affirmative defenses. And they now,
as they did at oral argument before the trial court, argue both judicial estoppel
and the entire controversy doctrine preclude plaintiffs' claim.
Amerco and the Boris defendants aver that they advanced judicial
estoppel, collateral estoppel and the entire controversy doctrine as grounds for
summary judgment; Amerco's notice of motion for summary judgment,
however, lists only collateral and judicial estoppel as grounds, and they
A-5699-16T3
4
advanced only those theories at oral argument before the trial court. The Boris
defendants' notice of cross-motion for summary judgment does not list any
theory. On appeal Amerco does not advance the entire controversy doctrine as
a ground for preclusion, only both forms of estoppel. The Boris defendants
now argue all three doctrines preclude plaintiffs' claim. None of the
defendants' briefs in support of their summary judgment motions appears in the
record, so we are unable to ascertain what arguments were advanced in the
trial proceedings.
Adding to the confusion, only the amended order granting Amerco's
summary judgment motion sets forth judicial estoppel as the basis for the trial
court's decision. The other orders grant the motions and dismiss plaintiffs'
complaint without stating a reason. The court's oral decision on the motions is
interspersed with colloquy with plaintiffs' counsel, thwarting appellate review.
Based on the blue-penciling of "collateral estoppel" on the face of the amended
order, we infer the court addressed only judicial estoppel as a basis for
granting Amerco's motion. We note, however, that the court made no mention
of collateral estoppel or the entire controversy doctrine in its oral decision.
Notwithstanding this omission, see R. 1:7-4(a) (requiring the motion
judge to make factual findings that are supported by the record and explain
legal conclusions in a manner amenable to appellate review); see also Estate of
A-5699-16T3
5
Doerfler v. Fed. Ins. Co., 454 N.J. Super. 298, 301-02 (App. Div. 2018), all
parties agree that the court's summary judgment decisions were based on
judicial estoppel.
On that record, we affirm the trial court's grant of summary judgment to
all defendants. Judicial estoppel is a defense to Spill Act claims for
contribution and its application was proper under the material circumstances of
this case which we now review in the light most favorable to plaintiffs. See
Brill v. Guardian Life Ins. Co. of Am., 142 N.J. 520, 540 (1995).
Plaintiffs leased the property to Keith Friedman and Michael Puccio who
operated a gas station there from 1981 until 2008. Before commencing their
operation, Puccio and Friedman relined E1-E3 with an epoxy coating in May
1981. The company which relined the tanks provided Puccio and Friedman
with a ten-year warranty. Puccio and Friedman used the tanks until 1993 when
new tanks were installed. They sold the gas station operation in 2008 and
vacated the property.
In May 2010, Matthew Terranova (Matthew) amended an action he had
filed against Puccio and Friedman related to an escrow agreement, adding
claims alleging Puccio's and Friedman's environmental contamination of the
property, including one for contribution under the Spill Act. The case
proceeded to arbitration before retired Judge Robert A. Longhi who adopted
A-5699-16T3
6
the findings set forth in a report authored by Matthew's expert, Eikon Planning
and Design, LLC, and found for Matthew. The arbitrator's decision, finding
Puccio and Friedman liable to reimburse Matthew $45,000 for expended
remediation costs and requiring them to "take over the remediation process"
was reduced to final judgment on February 6, 2012. Friedman and Puccio did
not fulfill the obligations imposed by the judgment.
Matthew hired Verina Consulting Group, LLC as an environmental
consultant in 2015 after parting ways with Eikon. Verina conducted furthe r
studies and concluded that "soil and groundwater contamination . . . associated
with the gasoline storage and handling" began on the property "on or before
1963 and continued until [E1-E3] were removed in 2000."
On November 10, 2015, plaintiffs filed the present action against
defendants based on Verina's conclusions. In the course of discovery,
defendants became aware of plaintiffs' initial litigation against Puccio and
Friedman and filed motions for summary judgment.2
We abide by our familiar standard of review that mandates summary
judgment be granted if the court determines "there is no genuine issue as to
any material fact challenged and that the moving party is entitled to a
2
Plaintiffs aver the motions were filed after plaintiffs' depositions were taken,
but before the completion of discovery.
A-5699-16T3
7
judgment or order as a matter of law." R. 4:46-2(c). We consider whether the
competent evidential materials presented, when viewed in the light most
favorable to the non-moving party in consideration of the applicable
evidentiary standard, are sufficient to permit a rational factfinder to resolve the
alleged disputed issue in favor of the non-moving party. Brill, 142 N.J. at 540.
We review the trial court's decision in these matters de novo, and afford the
trial court's ruling no special deference. Templo Fuente De Vida Corp. v. Nat'l
Union Fire Ins. Co., 224 N.J. 189, 199 (2016).
"We review a trial court's decision to invoke judicial estoppel using an
abuse of discretion standard." In re Declaratory Judgment Actions filed by
Various Municipalities, Cty. of Ocean, 446 N.J. Super. 259, 291 (2016) (citing
State, Div. of Motor Vehicles v. Caruso, 291 N.J. Super. 430, 438 (App. Div.
1996)), aff'd, 227 N.J. 508 (2017). A court abuses its discretion when a
decision "is 'made without a rational explanation, inexplicably departed from
established policies, or rested on an impermissible basis.'" U.S. Bank Nat'l
Ass'n v. Guillaume, 209 N.J. 449, 467 (2012) (quoting Iliadis v. Wal–Mart
Stores, Inc., 191 N.J. 88, 123 (2007)).
We are unpersuaded by plaintiffs' argument that judicial estoppel is not a
recognized defense to Spill Act claims, and that the defenses to Spill Act
claims are limited to "an act or omission caused solely by war, sabotage, or
A-5699-16T3
8
God, or a combination thereof," N.J.S.A. 58:10-23.11g(d)(1). And we do not
agree that the Supreme Court's rejection of a statute of limitations defense to
the Spill Act, Morristown Assocs. v. Grant Oil Co., 220 N.J. 360 (2015),
supports plaintiffs' position.
In Morristown Associates, the Court observed that the contribution
section of the Spill Act provides
"[a] contribution defendant shall have only the
defenses to liability available to parties pursuant to
[N.J.S.A. 58:10-23.11g(d)]." N.J.S.A. 58:10-
23.11f(a)(2)(a) (emphasis added). The language of the
statute expressly restricting the defenses available
under the Spill Act provides significant support for a
conclusion that no statute of limitations applies. The
Spill Act's incorporation of the defenses enumerated
in N.J.S.A. 58:10-23.11g(d) limits defendants to the
following defenses: "an act or omission caused solely
by war, sabotage, or God, or a combination thereof."
That list does not include a statute of limitations
defense.
[220 N.J. at 381 (alterations in original).]
Although the Court concluded the Legislature intended that all
individuals are limited to the subsection (d) defenses, it rejected an argument
that the exclusion of defenses in the contribution provision
deprives a defendant of other unlisted defenses that
should presumably be maintained, such as challenges
to venue, service of process, and subject matter
jurisdiction. Such defenses are established by court
rules under the jurisdiction of the Supreme Court and
are not subject to overriding legislation. Statutes of
A-5699-16T3
9
limitations, by contrast, are a product of the
Legislature. See State v. Short, 131 N.J. 47, 55
(1993).
[Id. at 382.]
Adhering to the Court's logic, judicial estoppel is not a defense subject
to any overriding legislation and, as such, it may be maintained against a Spill
Act claim. The doctrine is an equitable principle, Bahrle v. Exxon Corp., 279
N.J. Super. 5, 22 (App. Div. 1995), designed to "prevent litigants from 'playing
fast and loose with the courts,'" Cummings v. Bahr, 295 N.J. Super. 374, 387
(App. Div. 1996) (quoting Ryan Operations G.P. v. Santiam-Midwest Lumber
Co., 81 F.3d 355, 358 (3d Cir. 1996)). We have equated the doctrine's policy
concerns with those that buttress the entire controversy doctrine: to resolve a
controversy in one judicial proceeding "because 'fragmented and multiple
litigation takes its toll on not only the parties but the judicial institution and
the public.'" Ibid. (quoting Cogdell v. Hospital Ctr. at Orange, 116 N.J. 7, 23
(1989)).
Although not created by a court rule, judicial estoppel is required by
Rule to be affirmatively pled. R. 4:5-4. Moreover, it is rooted in the
judiciary's interest in protecting the integrity of the judicial process. It is not a
product of the Legislature; unlike the statute of limitations, it was not
A-5699-16T3
10
abrogated by the limitation of defenses in the contribution provisions of the
Spill Act.
We are also convinced that judicial estoppel precludes plaintiffs' present
Spill Act claims. Although it is an equitable principle, judicial estoppel differs
from equitable estoppel. Bahrle, 279 N.J. Super. at 22. We previously
recognized Oneida's differentiation of judicial estoppel from equitable
estoppel, in that the former "applies to preclude a party from assuming a
position in a legal proceeding inconsistent with one previously asserted.
Judicial estoppel looks to the connection between the litigant and the judicial
system while equitable estoppel focuses on the relationship between the parties
to the prior litigation." Cummings, 295 N.J. Super. at 385 (quoting Oneida
Motor Freight, Inc. v. United Jersey Bank, 848 F.2d 414, 419 (3rd Cir. 1988)).
Judicial estoppel most commonly applies when a party takes inconsistent
positions in different legal actions, ibid., and the party succeeds in maintaining
one of those positions, id. at 386. "If a court has based a final decision, even
in part, on a party's assertion, that same party is thereafter precluded from
asserting a contradictory position." Id. at 387-88. Our Supreme Court
explained the salutary policy considerations underpinning the application of
the doctrine:
[W]here a party has prevailed on a litigated point,
principles of judicial estoppel demand that such party
A-5699-16T3
11
be bound by its earlier representations. See McCurrie
v. Town of Kearny, 174 N.J. 523, 533 (2002)
(concluding that "judicial estoppel . . . precludes a
party from taking a position contrary to the position he
has already successfully espoused in the same or prior
litigation"[)].
[Guido v. Duane Morris LLP, 202 N.J. 79, 94-95
(2010).]
The Court's mandate to preclude this type of litigation strategy is particularly
warranted here.
In the action against Puccio and Friedman, Matthew contended they
alone were the culpable dischargers. That position ignored contentions that
were set forth in Eikon's report which cautioned that there were "numerous
discrepancies in the historic record regarding the reported condition of the
former USTs and the conditions encountered at the property with respect to the
alleged discharges and contamination." The report noted Puccio and Friedman
contended in their answers to interrogatories that, prior to lining tanks E1 -E3
in 1981, testing revealed the "tanks were corroded and were leaking a mixture
of gasoline and water into the ground." The report also stated Puccio and
Friedman described the tanks before they were lined as "'rotted' [and] had
'holes' in them."
A-5699-16T3
12
The Eikon report refuted Puccio's and Friedman's contentions, 3 pointing
out: no statutorily-required reports of spill activity in 1981 were made to a
regulatory agency; Puccio and Friedman opted to reline the corroded tanks
"instead of disassociating themselves from these reportedly flawed UST
systems and installing new tanks at that time"; the company that relined the
tanks did not report any tank problems; the relining company would not have
applied coating material to corroded tanks because the warranty provided by
the relining company required the application of the coating material to
suitable surfaces free from holes.
The Eikon report placed responsibility for all discharges on Puccio and
Friedman. The expert posited that the contaminants found in the soil and
groundwater samples it tested were discharged during Puccio's and Friedman's
tenure because the leaked chemicals were first introduced as gasoline additives
in the 1980s. The expert opined the small presence of lead in the samples
contraindicated leakage prior to the 1980s because its use as a gasoline
additive was discontinued in 1973.
3
We note that the report begins with Eikon's statement that it "was retained by
[Matthew through his then counsel] to provide expert environmental services
with regard to [Matthew's] position as a [p]laintiff in the case" against Puccio
and Friedman.
A-5699-16T3
13
During the arbitration proceedings, Matthew advanced, to great effect,
evidence that the property was contaminated only when Puccio and Friedman
were in possession. The decision to disregard the possibility that other
dischargers – from whom plaintiffs now seek contribution – were responsible
under the Spill Act and pursue only Puccio and Friedman is the type of
inconsistent practice necessitating application of the judicial estoppel doctrine.
Guido, 202 N.J. at 94-95. The disclosures by Puccio and Friedman were
sufficient to put plaintiffs on notice of possible claims under the Spill Act
which requires proof "only that a discharge occurred for which the
contribution defendant or defendants are liable pursuant to [N.J.S.A. 58:10-
23.11g]." N.J.S.A. 58:10-23.11f(a)(2)(a). See Lynch v. Rubacky, 85 N.J. 65,
70-71 (1981) (holding a claim accrues when a plaintiff "learns, or reasonably
should learn, the existence of that state of facts which may equate in law with
a cause of action" that is based upon the material facts of the case (quoting
Burd v. N.J. Tel. Co., 76 N.J. 284, 291 (1978))). The Spill Act imposes joint
and several liability "without regard to fault, for all cleanup and removal costs"
upon "any person who has discharged a hazardous substance, or is in any way
responsible for any hazardous substance." N.J.S.A. 58:10-23.11g(c)(1). "A
party even remotely responsible for causing contamination will be deemed a
responsible party under the Act." In re Kimber Petroleum Corp., 110 N.J. 69,
A-5699-16T3
14
85 (1988). Matthew's stance against Puccio and Friedman, ignoring evidence
of other possible culpable dischargers, is the type of practice that plays "fast
and loose," Ryan Operations G.P., 81 F.3d at 358, with the judicial system.
Instead of one proceeding against all possible dischargers, the judicial process
is now burdened with a fragmented action.
The circumstances here justify application of judicial estoppel, an
equitable doctrine. While the present defendants may be able to conduct
testing at the property, the passage of over five years between the filing of
suits presents hardships. Defendants are now required to rely on the ability to
recall events and reconstruct records from 1963 to 1981. Further, the
testimony from the arbitration proceedings was not recorded; the statements
upon which the arbitrator imposed liability on Puccio and Friedman are not
available to defendants. The truth-seeking mission of the judiciary is impaired
by plaintiffs' actions.
Application of the doctrine does not preclude property owners from
seeking contribution from dischargers under the Spill Act. It si mply compels
owners to pursue, in a single action, dischargers which are known or
reasonably knowable from the circumstances. That is the principle underlying
judicial estoppel, and of the equitable principles of collateral estoppel and the
A-5699-16T3
15
entire controversy doctrine. The integrity of the judicial process depends on
compliance with those principles.
We recognize that judicial estoppel may be invoked only in limited
circumstances because it is an extraordinary remedy. In re Declaratory
Judgment, 446 N.J. Super. at 292. The circumstances of this case however,
even viewed in the light most favorable to plaintiffs, compel application of that
remedy. Employment of judicial estoppel to this Spill Act case is consonant
with the Act's objective: "remedial legislation designed to cast a wide net over
those responsible for hazardous substances and their discharge on the land and
waters of this state." Morristown Assocs., 220 N.J. at 383. Concomitantly,
casting that net over all dischargers in a single action upholds the integrity of
the judicial system; plaintiffs are precluded from floating a lazy cast toward
one discharger and then shooting a second line toward others, seeking
contribution for clean-up of the same property. The trial court did not abuse
its discretion in basing summary judgment on the doctrine of judicial estoppel.
Affirmed.
A-5699-16T3
16