New Jersey Department of Environmental Protection v. Hexcel Corporation ( 2024 )

NOT FOR PUBLICATION WITHOUT THE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-1189-22
NEW JERSEY DEPARTMENT
OF ENVIRONMENTAL
PROTECTION and THE
COMMISSIONER OF THE
NEW JERSEY DEPARTMENT
OF ENVIRONMENTAL
PROTECTION,
Plaintiffs-Appellants,
v.
HEXCEL CORPORATION and
FINE ORGANICS CORPORATION,
Defendants-Respondents.
______________________________
Submitted February 13, 2024 – Decided April 19, 2024
Before Judges Gooden Brown and Puglisi.
On appeal from the Superior Court of New Jersey, Law
Division, Bergen County, Docket No. L-1864-22.
Matthew J. Platkin, Attorney General, attorney for
appellants (Donna Sue Arons, Assistant Attorney
General, of counsel; Willis A. Doerr, Deputy Attorney
General, on the briefs).
Richard B. Harper (Baker Botts LLP), Joshua B. Frank
(Baker Botts LLP) of the District of Columbia bar,
admitted pro hac vice, and Martha S. Thomsen (Baker
Botts LLP) of the District of Columbia bar, admitted
pro hac vice, attorneys for respondents (Richard B.
Harper, Joshua B. Frank, and Martha S. Thomsen, on
the brief).
PER CURIAM
Plaintiffs New Jersey Department of Environmental Protection and the
Commissioner of the New Jersey Department of Environmental Protection
(collectively, the DEP), appeal from the Law Division's August 19, 2022 order
dismissing without prejudice the DEP's complaint against defendants Hexcel
Corporation and Fine Organics Corporation. Because the trial court mistakenly
found the complaint was barred by a prior consent judgment between the parties,
we reverse and remand.
I.
In 1973, defendant Hexcel acquired a chemical manufacturing facility in
Lodi (the site) where it conducted operations until 1986, when it sold the site to
defendant Fine Organics. In 1998, Fine Organics sold the site back to Hexcel,
after which no further operations occurred there.
The 1986 sale triggered remediation obligations under what became the
Industrial Site Recovery Act (ISRA), N.J.S.A. 13:1k-6 to -14, stemming from
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chemical use and fuel oil contamination at the site. To address remediation,
Hexcel, Fine Organics and the DEP entered into an administrative consent order.
In 2016, a licensed site remediation professional issued a response action
outcome deeming remediation complete.
In 2005, the DEP sued Occidental Chemical Corporation and various other
entities pursuant to the Spill Compensation and Control Act (the Spill Act),
N.J.S.A. 58:10-23.11 to -23.24, the Water Pollution Control Act (WPCA),
N.J.S.A. 58:10A-1 to -35, and common law, seeking past and future damages
associated with the discharge of hazardous substances from a property in
Newark that migrated throughout the Newark Bay Complex (the Passaic River
Litigation). (N.J. Dep't of Env't Prot. v. Occidental Chem. Corp., No. ESX-L-
9868-05 (N.J. Super. Law Div. 2005)). Defendants in that case filed third-party
complaints against Hexcel, Fine Organics and over 200 other companies.
In 2013, the DEP entered into a consent judgment with Hexcel, Fine
Organics and other third-party defendants, partially resolving the potential
claims raised in that matter. Through the consent judgment, the parties settled
liability for natural resource damages (NRD) of the Newark Bay Complex,
subject to a cap/reopener not at issue in this appeal.
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In 2022, the DEP commenced this action against defendants asserting
causes of action under the Spill Act, WPCA, strict liability, public nuisance, and
trespass. The complaint alleged investigations prior to the 1986 sale of the site,
as well as later investigations, "revealed widespread contamination of soil and
groundwater and other natural resources at and around the [s]ite."
Count I alleged defendants discharged "hazardous substances at the [s]ite"
under the Spill Act. Count II alleged defendants were strictly liable for
contamination of the site's groundwater under the WPCA. Count III alleged
defendants were strictly liable for contaminating the site's groundwater because
defendants' activities were abnormally dangerous. Counts IV and V alleged the
site's groundwater contamination constituted a public nuisance and trespass.
Defendants moved for dismissal, arguing the complaint was untimely
under the applicable statute of limitations and barred by the consent judgment.
The court agreed with defendants and dismissed the complaint without
prejudice, finding the consent judgment barred the complaint. Because it
decided the motion on those grounds, the court did not address the other
arguments raised in defendants' motion, including whether the complaint was
subject to dismissal based on statute of limitations grounds and for failure to
plead with specificity.
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On August 19, 2022, the court filed an order and written opinion. In its
decision, the court noted DEP's counsel's statement at oral argument that it was
not seeking damages related to offsite impacts but rather damages related to
groundwater below the site was "in direct contrast with the allegations set forth
in [the DEP's] complaint." The court found both the site's groundwater and
offsite impacts were included in the scope of the consent judgment, and took
"specific note" the consent judgment's definition of NRD "include[d] all of the
causes of action set forth in [the DEP's] complaint . . . specifically[,] the Spill
Act, the WPCA, state common law, and state statutory claims."
In addressing the consent judgment's reservation of rights with respect to
"other actions," the court stated it was "uncontested that the [s]ite is located in
the Newark Bay Complex." The court also found the consent judgment's
definition of the Newark Bay Complex included "'adjacent waters' investigated
as part of the Diamond Alkali Superfund Process." Relying on public
Environmental Protection Agency (EPA) documents appended to defendants'
motion, the court noted in the years following the consent judgment, "the EPA
has made clear . . . that the areas investigated in the Diamond Alkali Superfund
Site (and, by definition, the Newark Bay Complex) include not just the surface
waterbodies and sediments, but the entire areal extent of the contamination and
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watershed area." The court further noted the site and associated groundwater
are included "upland sites."
The court found "[b]oth the Saddle River and the adjacent groundwater
(including the groundwater at the [s]ite) were within the geographic scope of the
Diamond Alkali Superfund Process investigation and specifically within the
area studied around the Lower Passaic River." Because the site was within the
"areal extent of the contamination" investigated by the EPA in connection with
the Diamond Alkali Superfund Process, the court determined it was part of the
Newark Bay Complex.
The court found "the plain language of the [consent judgment] provides
that the [s]ite, [s]ite groundwater, and any alleged off-site contamination are all
part of the 'Newark Bay Complex' and [the] DEP's claims for NRD in this case
are therefore barred by the [consent judgment]."
The court denied the DEP's subsequent motion to amend the order. This
appeal followed, wherein the DEP raises the following issues for our
consideration:
POINT I
THE TRIAL COURT’S ORDER SHOULD BE
REVERSED BECAUSE IT ERRONEOUSLY
CONCLUDED THAT THE SITE’S GROUNDWATER
IS AN "ADJACENT WATER."
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POINT II
THE TRIAL COURT INCORRECTLY
INTERPRETED AND APPLIED THE TERMS OF
THE 2013 CONSENT JUDGMENT TO CONCLUDE
THAT THE SITE WAS INVESTIGATED FOR
REMEDIATION AS PART OF THE DIAMOND
ALKALI SUPERFUND PROCESS AND FAILED TO
PROVIDE THE STATE WITH THE BENEFIT OF
ALL REASONABLE INFERENCES.
II.
In considering a motion to dismiss for failure to state a claim upon which
relief may be granted under Rule 4:6-2(e), the court assumes "allegations of the
pleading are true and affords the pleader all reasonable factual inferences."
Seidenberg v. Summit Bank, 348 N.J. Super. 243, 249-50 (App. Div. 2002).
"This requires that the pleading be searched in depth and with liberality to
determine whether a cause of action can be gleaned even from an obscure
statement." Id. at 250. Courts must "proceed gingerly because Rule 4:6-
2(e) motions to dismiss should be granted in 'only the rarest [of] instances.'"
Banco Popular N. Am. v. Gandi, 184 N.J. 161, 165 (2005) (citations omitted).
Our review of an order granting a motion to dismiss is governed by the same
standard as applied by the trial court. Ibid.A consent judgment is both a judicial decree and a contract—"it is not
strictly a judicial decree, but rather in the nature of a contract entered into with
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the solemn sanction of the court." Cmty. Realty Mgmt., Inc. for Wrightstown
Arms Apartments v. Harris, 155 N.J. 212, 226 (1998) (quoting Stonehurst at
Freehold v. Township Comm., 139 N.J. Super. 311, 313 (Law. Div. 1976)).
Contract principles apply to a consent judgment, and it is treated as a quasi -
contract. See ibid.Generally, contract interpretation is subject to de novo review. Kieffer v.
Best Buy, 205 N.J. 213, 222 (2011). "Accordingly, we pay no special deference
to the trial court's interpretation and look at the contract with fresh eyes." Id. at
223. See Manalapan Realty, L.P. v. Twp. Comm. of Manalapan, 140 N.J. 366,
378 (1995). Courts enforce contracts based on the parties' intent, the underlying
purpose of the contract, and the surrounding circumstances. Cypress Point
Condo. Ass'n v. Adria Towers, LLC, 226 N.J. 403, 415 (2016). "The judicial
task is simply interpretative; it is not to rewrite a contract for the parties better
than or different from the one they wrote for themselves." Kieffer, 205 N.J. at
223. "The document must be read as a whole, in 'accord with justice and
common sense.'" Cumberland Cnty. Imp. Auth. v. GSP Recycling Co., Inc., 358
N.J. Super. 484, 497 (App. Div. 2003) (quoting Krosnowski v. Krosnowski, 22
N.J. 376, 387 (1956)). Additionally, the contract "should not be interpreted to
render one of its terms meaningless." Ibid.A-1189-22
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"The court makes the determination whether a contractual term is clear or
ambiguous." Schor v. FMS Fin. Corp., 357 N.J. Super. 185, 191 (App. Div.
2002). A contract term is ambiguous when it is susceptible to more than one
reasonable interpretation. Ibid.; see Powell v. Alemaz, Inc., 335 N.J. Super. 33,
44 (App. Div. 2000). The court should interpret contract terms "so as to avoid
ambiguities, if the plain language of the contract permits." Stiefel v. Bayly,
Martin and Fay of Conn., Inc., 242 N.J. Super. 643, 651 (App. Div. 1990).
When contractual terms are clear, "[courts] must enforce the contract as
written," Graziano v. Grant, 326 N.J. Super. 328, 342 (App. Div. 1999), and
courts are to interpret contracts "in accord with justice and common sense."
Homann v. Torchinsky, 296 N.J. Super. 326, 334 (App. Div. 1997) (quoting
Krosnowski, 22 N.J. at 387).
When contractual terms are ambiguous, however, courts "consider the
parties' practical construction of the contract as evidence of their intention and
as controlling weight in determining a contract's interpretation." Barila v. Bd.
of Educ. of Cliffside Park, 241 N.J. 595, 616 (2020) (internal citations omitted).
Here, the "matters addressed" by the consent judgment included all
liabilities of the third-party defendants associated with the discharge of
hazardous substances into the Newark Bay Complex from third-party sites,
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regardless of the location of the source of the discharge, whether inside or
outside the Newark Bay Complex.
"Claims" included all claims of the DEP against defendants for discharges
to the Newark Bay Complex or otherwise sought by the DEP from defendants
in the Passaic River Litigation; all claims of the DEP for which third-party
plaintiffs alleged or could have alleged that they were entitled to contribution
from third-party defendants for discharge of hazardous substances to the Newark
Bay Complex or otherwise sought by the third-party plaintiffs from third-party
defendants in the Passaic River Litigation; and all claims for NRDs associated
with settling third-party defendants' discharges of hazardous substances to the
Newark Bay Complex.
NRDs were defined as:
all claims arising from [d]ischarges at or to the Newark
Bay Complex, known or unknown, that occurred prior
to the effective date of this [c]onsent [j]udgment and
that are recoverable by any New Jersey state natural
resource trustee as damages for injuries to natural
resources under the Spill Act; the WPCA; the Oil
Pollution Act, 33 U.S.C.A. §§ 2701 through -2761; the
Clean Water Act, 33 U.S.C.A. §§ 1251 through -1387;
CERCLA,[1] or any other state or federal common law,
statute, or regulation, for compensation for the
restoration and/or replacement of, the lost value of,
1
Comprehensive Environmental Response, Compensation and Liability Act, 42
U.S.C. §§ 9601 to 9675.
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injury to, or destruction of natural resources and natural
resource services.
Although the DEP agreed not to sue for any future claims against any
settling third-party defendant under State and federal statutory and common law,
the consent judgment included one exception relevant to this appeal: the DEP
was not precluded from bringing future claims related to the discharge of a
hazardous substance "at, onto or from" a third-party site to the extent the claims
were caused by discharge of hazardous substances not located in the Newark
Bay Complex, that do not come to be located in the Newark Bay Complex.
The DEP argues the trial court erred in finding the site's groundwater was
an adjacent water based on three different incorrect premises: 1) because the
groundwater was investigated for remediation as part of the Diamond Alkali
Superfund Process, based on the site's location in the geographic scope of the
investigation; 2) based on an expanded definition contrary to the consent
judgment; and 3) because it was located in the Passaic River Watershed.
The consent judgment defined the Newark Bay Complex as:
(i) the lower [seventeen] miles of the Passaic River, (ii)
Newark Bay, (iii) the Arthur Kill, (iv) the Kill Van
Kull, (v) to the extent investigated for remediation as
part of the Diamond Alkali Superfund Process, the
lower reaches of the Hackensack River and as may be
further extended by [the] EPA in the Diamond Alkali
Superfund Process, and (vi) to the extent investigated
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for remediation as part of the Diamond Alkali
Superfund Process, any adjacent waters and sediments
of (i) through (v).
Because the site's groundwater is not a body of water enumerated in (i)
through (v), two criteria must be met for it to fall within the scope of the Newark
Bay Complex: it must be adjacent to either the Passaic River, Newark Bay,
Arthur Kill, Kill Van Kull, or the lower reaches of the Hackensack River; and
must have been investigated for remediation as part of the Diamond Alkali
Superfund Process. These are separate and distinct determinations.
The DEP acknowledges the consent judgment does not define "adjacent
waters," but relies on 33 C.F.R. 328.3(c) and 40 C.F.R. 120.2(c)(2), both of
which define adjacent as "having a continuous surface connection." The DEP
asserts the term is "typically understood in the environmental context to mean
'bordering' or 'contiguous' waters."
The DEP also cites Rapanos v. U.S., which held that a "continuous surface
connection," or instances of "no clear demarcation" between two water bodies
would be sufficient to deem waters "adjacent" to one another, but "an
intermittent, physically remote hydrological connection" is not. 547 U.S. 715,
742 (2006). As such, the DEP contends "adjacent water" does not refer to
groundwater, and even if it did, the groundwater at the site has no direct
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connection to the Passaic River, Newark Bay, Arthur Kill, Kill Van Kull, or the
lower reaches of the Hackensack River.
In Rapanos, the plurality opinion determined wetlands are within the
scope of the CWA only when they have "a continuous surface connection to
bodies that are 'waters of the United States' in their own right, so that there is no
clear demarcation between 'waters' and wetlands." Id. at 742. Justice Kennedy's
concurring opinion stated wetlands are subject to the CWA if they shared a
significant nexus with waters of the United States. Id. at 780. Under the second
test, wetlands were "adjacent to" waters of the United States, and thus within
the CWA, if they, "either alone or in combination with similarly situated lands
in the region, significantly affect the chemical, physical, and biological integrity
of other covered waters more readily understood as 'navigable.'" Ibid. In U.S.
v. Donovan, the Third Circuit held "the CWA is applicable to wetlands that meet
either the test laid out by the plurality or by Justice Kennedy in Rapanos." 661
F.3d. 174, 184 (3rd Cir. 2011).
While Rapanos addressed the adjacency of wetlands to surface waters, it
is instructive in this case, where the consent judgment did not define the term.
Here, under either test, the site's groundwater is not adjacent to the Passaic
River, Newark Bay, Arthur Kill, or Kill Van Kull. It is groundwater, not surface
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water, and therefore it cannot have "a continuous surface connection" to the
enumerated bodies of water.
Under the concurring test, nothing in this record supports a conclusion the
groundwater "significantly affect[ed] the chemical, physical, and biological
integrity of other covered waters." While the first action brought by the DEP
included contamination of surface waters, the instant complaint is for the site's
groundwater, not its impact on other bodies of water.
Additionally, the plain meaning of "adjacent" does not support the trial
court's finding. Black's Law Dictionary defines "adjacent" as "[l]ying near or
close to, but not necessarily touching." Black's Law Dictionary 50 (11th ed.
2019). Utilizing this definition, the site's groundwater is not adjacent to any of
the enumerated bodies of water.
We also reject defendants' contention that any water within the Lower
Passaic River Study area is part of the Newark Bay Complex because it was
part of the EPA's investigation. This interpretation of the consent judgment
renders the requirement of adjacency obsolete and meaningless, and we are
reluctant to construe contract terms in such a manner. See Cumberland Cnty.
Imp. Auth., 358 N.J. Super. at 497.
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We are also unpersuaded by defendants' argument that the groundwater
is part of the Newark Bay Complex because it is hydrologically connected to
the Saddle River. Defendants theorize that because the groundwater is "plainly
adjacent to the Saddle River," which is part of the Newark Bay Complex, and
the Saddle River flows into the Lower Passaic River, establishing a
hydrological connection between the three waterbodies, they are all adjacent.
This contention is an overbroad reading of the specific term of the consent
judgment. The Saddle River was part of the EPA's investigation and was
adjacent to the Passaic River, which makes the Saddle River part of the Newark
Bay Complex. However, the site's groundwater's adjacency to the Saddle River
does not, under the confines of the consent judgment, render it part of the
Newark Bay Complex.
The second issue is whether the site's groundwater was "investigated for
remediation as part of the Diamond Alkali Superfund Process," which refers to
all investigations and/or response actions (including
without limitation removal actions and remedial
actions) undertaken in respect to the Diamond Alkali
Superfund Site . . . that address or respond to any
Discharge of Hazardous Substances that are located or
come to be located within the Diamond Alkali
Superfund Site (regardless of the location of the source
of such Discharge whether inside or outside the Newark
Bay Complex).
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The "Diamond Alkali Superfund Site" was the "geographic area consisting
of all operable units or areas identified for investigation and/or response actions
. . . by [the EPA], the [DEP], or any other agencies and departments of the State
of New Jersey as part of the Diamond Alkali Superfund Process" and such areas
include, among others, "the Lower Passaic River Study Area." The "Lower
Passaic River Study Area" was "the lower [seventeen] miles of the Passaic River
and its tributaries, from the confluence with [the] Newark Bay to the Dundee
Dam, . . . and as may be expanded by [the EPA]."
The parties disputed whether the EPA had investigated the site's
groundwater, reasserting the arguments they advanced before the trial court. In
support of their respective positions, both parties submitted documents
regarding the EPA's involvement with the area. The DEP provided the EPA's
2016 and 2021 records of decision, which do not indicate the site's groundwater
was part of the Diamond Alkali Superfund Process. The DEP pointed out the
EPA's modeling "suggest[ed] that groundwater discharge [was] not a significant
source of contamination," and therefore the EPA did not expect it "to be [a]
major contaminant source[] to the [Lower Passaic River]." The DEP argued
these statements showed the EPA declined to investigate groundwater.
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Defendants countered that, under the plain language of the contract, the
EPA investigated the site groundwater because it was part of the areal extent of
the contamination and watershed area. Defendants argued the term watershed
includes groundwater, which in turn means the EPA investigated the site's
groundwater.
Whether the EPA investigated the site's groundwater was a factual issue
in dispute that should not have been resolved on motion. The documentation
referred to by both parties is not dispositive of the issue, as it does not squarely
answer the question and is subject to interpretation. Accordingly, the factual
question of the scope of the EPA's investigation should not have been resolved
at this early stage, where "plaintiffs are entitled to every reasonable inference of
fact." Printing Mart-Morristown v. Sharp Elec. Corp., 116 N.J. 739, 746 (1989)
(citation omitted).
Reversed and remanded for further proceedings. We do not retain
jurisdiction.
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