JOHN P. KEEGAN VS. TOWN OF KEARNY VS. NEW JERSEY SPORTS EXPOSITION, ETC. (L-3330-15, HUDSON COUNTY AND STATEWIDE) ( 2018 )

NOT FOR PUBLICATION WITHOUT THE
APPROVAL OF THE APPELLATE DIVISION
This opinion shall not "constitute precedent or be binding upon any court."
Although it is posted on the internet, this opinion is binding only on the
parties in the case and its use in other cases is limited. R. 1:36-3.
SUPERIOR COURT OF NEW JERSEY
APPELLATE DIVISION
DOCKET NO. A-1162-16T1
JOHN P. KEEGAN,
Plaintiff,
v.
TOWN OF KEARNY,
Defendant/Third-Party
Plaintiff-Appellant,
v.
NEW JERSEY SPORTS AND EXPOSITION
AUTHORITY (formerly the NEW JERSEY
MEADOWLANDS COMMISSION),
Third-Party Defendant-Respondent.
________________________________________
Submitted October 11, 2017 – Decided July 26, 2018
Before Judges Fuentes, Koblitz and Manahan.
On appeal from Superior Court of New Jersey,
Law Division, Hudson County, Docket No. L-
3330-15.
Castano Quigley, LLC, attorney for appellant
(Gregory J. Castano, Jr. on the brief).
Lowenstein Sandler, LLP, attorney for
respondent (James E. Stewart and Rachel K.
Warren, on the brief).
PER CURIAM
The Keegan Landfill was an inoperative landfill on land owned
by both the Town of Kearny (Town) and John P. Keegan. Because the
landfill was left uncapped after it ceased operation, it leaked
heavy metals and pollutants into nearby streams and marshlands.
The New Jersey Sports and Exposition Authority (NJSEA), formerly
the New Jersey Meadowlands Commission, entered into an agreement
with the Town, through which the NJSEA accepted sole financial
responsibility for capping and remediating the landfill and
marshlands. The NJSEA also agreed to acquire title to Keegan's
property, remediate his portion of the property, and pursue cost-
recovery actions against him. In exchange, the NJSEA was granted
the right to operate the landfill for a term of years, retaining
all rights to recoup the cost of remediation.
The NJSEA fulfilled all of its contractual obligations. It
remediated and capped the landfill, condemned Keegan's property,
and recovered nearly $900,000 from Keegan in a cost-recovery action
under the New Jersey Spill Compensation and Control Act (the Spill
Act), N.J.S.A. 58:10-23.11 to -23.24. Keegan thereafter filed
suit against the Town seeking contribution. Because the Town
owned significant portions of the land, Keegan argued it should
bear partial liability for the cost of remediation. In response,
the Town filed a third-party complaint against the NJSEA,
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contending the lease agreement provided that the Town would bear
"no expenses whatsoever" from the remediation plan.
The NJSEA moved for summary judgment to dismiss the Town's
third-party action seeking contractual indemnification. The Town
cross-moved seeking the enforcement of this alleged hold harmless
clause in the lease agreement with respect to the cost of
remediation. The matter came for oral argument before Judge Lisa
Rose. After considering the arguments of counsel, Judge Rose
granted the NJSEA's motion, denied the Town's cross-motion and
dismissed with prejudice the third-party complaint against the
NJSEA.
In this appeal, the Town argues the motion judge misconstrued
several provisions in the lease agreement that show that the NJSEA
agreed to assume "sole responsibility" for the cost of remediation,
without any financial assistance or contribution from the Town.
Because the Law Division decided this issue as a matter of law,
our review is de novo. Town of Kearny v. Brandt, 214 N.J. 76, 91
(2013). We will apply the same standards used by the motion judge.
Bhagat v. Bhagat, 217 N.J. 22, 38 (2014). After reviewing the
competent evidential materials submitted by the parties, we
conclude there are no genuine issues of material fact in dispute,
and the matter is ripe for summary judgment. Ibid. Viewing the
undisputed material facts in the light most favorable to the Town
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pursuant to Rule 4:46-2(c), we conclude Judge Rose correctly
dismissed the Town's third-party complaint against the NJSEA as a
matter of law.
After carefully reviewing the record presented by the parties
and canvassing the relevant case law related to contractual
indemnification, Judge Rose found that "none of the provisions of
the lease agreement [relied on by the Town] meet the strict
requirements of New Jersey law with respect to indemnification
provisions and contracts." We agree and affirm.
This is the second time this court has reviewed a decision
from the Law Division that addressed who should bear the cost of
remediating the Keegan Landfill. In an unpublished opinion, this
court reviewed the Law Division's decision, made after a bench
trial, that found Keegan was not liable for the cost of remediation
under the Spill Act, or the Sanitary Landfill Facility Closure and
Contingency Act (the Closure Act), N.J.S.A. 13:1E-100 to -227.
N.J. Meadowlands Comm'n v. Keegan, No. A-6090-10 (App. Div. 2013)
(slip op. at 2). Both parties appealed, challenging "the rulings
on liability favorable to the other, and both contend[ed] the
court erred in fixing Keegan's share of the costs." Ibid.This court concluded Keegan was liable under the Closure Act,
reversed the judgment of the trial court, and remanded the matter
for reconsideration of damages. This court explained:
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Because the evidence establishes that Keegan
acquired the property knowing it was a former
landfill from his father, was involved albeit
tangentially in its operation, had reason to
know its improper closure presented the
potential environmental problems, and held the
property for speculation for several decades,
we conclude that the court erred in finding
he was not liable under the Closure Act.
Accordingly, we remand for reconsideration of
the costs that the court disallowed in
fashioning an award designed to do nothing
more than avoid unjust enrichment.
[Id. at 3-4.]
In reaching this conclusion, this court reviewed the lengthy
history of the Keegan Landfill and its environmental impact. In
lieu of restating this history, we incorporate it by reference
here. Id. at 4 to 16.
On June 14, 2005, the Town agreed to lease the landfill to
the NJSEA for a ten-year term commencing on June 15, 2005 and
ending December 15, 2015. The lease contains eleven unnumbered
prefatory or "WHEREAS" clauses. The Town focuses on the following
prefatory clause as evidence of the parties' intent and expectation
as to who would bear the cost of remediation:
WHEREAS, as part of this project the [NJSEA][1]
will assume sole responsibility, without
financial assistance or contribution from
Kearny, for the design and implementation of
a closure plan approved by the Department of
Environmental Protection ("DEP")[.]
1
As noted earlier, the lease agreement was signed by the Town and
the NJSEA's predecessor, the New Jersey Meadowlands Commission.
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The lease agreement contained thirty numbered and titled
sections, many of which were further subdivided into multiple
subsections. Section 4 is titled "Other Property Interests."
Subsection 4A states, in relevant part, that the NJSEA "shall be
responsible, at its sole cost and expense, for acquiring and
terminating any leasehold in the Demised Premises . . . held by
Hudson Meadowlands Urban Renewal Development Corporation . . . ."
Subsection 4B states, in relevant part:
The [NJSEA] shall also be responsible, at its
sole cost and expense, for acquiring fee
simple title to and any other interests in
property necessary for it to conduct Disposal
Operations and provide for the closure of
portions of the Keegan Landfill that are not
under the ownership of the Town.
Specifically, the [NJSEA] shall acquire that
. . . which shall include . . . the property
believed to be owned by John Keegan, Esq.
. . . consisting of 3.342 acres, more or less
("the Retained Properties") . . . .
Finally, section 11, titled "No Cost to Town," states:
It is the intention of the parties that the
Town shall have no expenses whatsoever with
respect to the Demised Premises or the
Retained Premises during the Lease term and
the [NJSEA] agrees that it will provide, at
its sole cost and expense, for the closure of
the Keegan Landfill. During the Lease term,
the Rent and Host Community Payments shall be
absolutely "net" to the Town.
These three sections of the lease agreement are the core
facts the Town cites to support its argument that the NJSEA agreed
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to indemnify it against any claims related to the cost of
remediating the Keegan Landfill. Judge Rose found none of these
sections supported the Town's argument. Judge Rose observed that
none of these lease provisions relied on by the Town used the term
"indemnity," which she noted was a term of contract law that
requires unambiguous language to ensure there is mutual assent.
Citing Kutzin v. Pirnie, 124 N.J. 500, 507 (1991), Judge Rose
emphasized that "the governing language" of a contract should be
unambiguous, clear, and leave no doubt as to its meaning. The
absence of any reference to "indemnity" in the lease is a material
factor that undercuts the Town's argument because "indemnification
agreements are interpreted in accordance with the rules governing
contracts generally, ambiguous clauses should be construed
strictly against the indemnitee." Mantilla v. Nc Mall Assocs.,
167 N.J. 262, 269 (2001) (quoting E.I. duPont deNemours & Cent.
Motor Parts Corp. v. E.I. duPont deNemours & Co., 251 N.J. Super.
5, 13 (App. Div. 1991)).2
The NJSEA also argued against the Town's claims based on
"common law and statutory contribution." In rejecting the Town's
2
Judge Rose also addressed and rejected the Town's argument based
on "implied indemnification." Because the Town has not made this
argument in this appeal, we will not address it. See Mid-Atlantic
Solar Energy Indus. Ass'n v. Christie, 418 N.J. Super. 499, 508
(App. Div. 2011); see also R. 2:6-2(a)(5).
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claims based on these two theories of liability, Judge Rose noted
that "Kearny did not . . . set forth any opposition with respect
to [these] . . . contribution claims." She then held:
In order for a claim of contribution to
succeed, whether common law or statutory, the
person from whom contribution is sought, must
be at least partially liable to the
plaintiff[.]
. . . .
Here, Kearny's common law and statutory claims
for contribution fail for the same reason that
its claims for implied indemnification failed.
That is, [the] NJSEA cannot be responsible for
the contamination of the subject property
because the contamination at issue occurred
long before NJSEA entered into the lease
agreement with Kearny.
We agree. In this appeal, the Town has not cited any
authority to rebut Judge Rose's unassailable conclusion based on
this settled principle of law. We thus affirm substantially for
the reasons expressed by Judge Rose in her oral decision delivered
from the bench on September 16, 2016.
Affirmed.
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