SUNWAY EQUITY, LLC v. SUBURBAN PROPANE, LP (L-0458-17, SOMERSET COUNTY AND STATEWIDE)

NOT FOR PUBLICATION WITHOUT THE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-4360-19
SUNWAY EQUITY, LLC, a
Limited Liability Company
organized and existing under the
laws of the State of New Jersey,
GLENN T. WERTHEIM, and
GAIL WERTHEIM,
Plaintiffs-Appellants,
v.
SUBURBAN PROPANE, LP,
a Delaware Limited Partnership,
SOVEREIGN CONSULTING, INC.,
and BROCKERHOFF
ENVIRONMENTAL SERVICES,
LLC,
Defendants,
and
JM SORGE, INC.,
Defendant-Respondent.
______________________________
Argued November 15, 2021 – Decided January 12, 2022
Before Judges Sumners and Vernoia.
On appeal from the Superior Court of New Jersey, Law
Division, Somerset County, Docket No. L-0458-17.
Glen J. Vida argued for appellants.
Patrick J. McCormick argued for respondent (Hardin,
Kundla, McKeon & Poletto, attorneys; Patrick J.
McCormick and Jenna K. Clemente, on the brief).
PER CURIAM
In this action arising from the environmental remediation of commercial
property (the property) by defendant JM Sorge, Inc. (JMS), plaintiffs Sunway
Equity, LLC (Sunway), Glenn T. Wertheim, and Gail Wertheim, who purchased
the property from defendant Suburban Propane, LP (Suburban) about nine years
after remediation was deemed completed, appeal the summary judgment
dismissal of their complaint against JMS. We affirm the dismissal because: (1)
the action was barred by the statute of limitations; and (2) if the action was not
time-barred, JMS did not owe a duty to plaintiffs relative to its remediation of
the property.
I.
As this is an appeal from summary judgment granted to defendant, our
recitation of the facts is derived from the evidence submitted by the parties in
support of, and in opposition to, the summary judgment motion, viewed in the
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light most favorable to plaintiffs, and giving them the benefit of all favorable
inferences. Angland v. Mountain Creek Resort, Inc., 213 N.J. 573, 577 (2013).
A.
Remediation
In 1991, Suburban retained JMS to remove three underground storage
tanks containing gasoline, diesel, and waste oil, from its 1.7-acre property in
Bridgewater Township. After the New Jersey Department of Environmental
Protection (DEP) approved JMS's Underground Storage Tank Closure Plan on
January 30, remediation work began on February 19. In August, JMS produced
a Site Assessment Report detailing its work and investigations at the site.
After five years of JMS's remediation work, the DEP issued a May 20,
1996 letter to Suburban, stating, "no further action [was] required for the soils
associated with" the "three separate Areas of Concern" where the tanks were
previously located, but that additional groundwater testing for volatile organic
compounds (VOC) contaminates was still necessary. On January 20, 1997, JMS
submitted a Supplemental Investigation Report/Remedial Action Workplan to
DEP that it prepared for Suburban. The report "confirmed that the subsurface
soils" near the diesel tank excavation were contaminated with VOCs, which
"appear[ed] to be the result of surficial discharges of gasoline and is not related
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to the former operation of" the diesel tank. JMS "propos[ed] to remediate this
relatively limited area of contaminated soil using standard excavation and
removal techniques[,]" and then install a replacement monitoring well in the area
"to assess the positive impacts of the proposed soil remediation efforts on local
groundwater quality." The tank locations excavated covered a total of
approximately 736 square feet, roughly one percent of the 1.7 acre, or 74,052
square feet, of the property.
In a July 24, 1997 letter to DEP, which was copied to Suburban, JMS
reported it conducted "relatively small . . . excavation[s]" and soil tests "from
around the outer perimeter of each excavation[,]" which revealed benzene, a
VOC, at concentrations above DEP cleanup criteria, but "[n]o other
[contaminants] were detected exceeding" the criteria.
Approximately ten months later, on April 8, 1998, JMS submitted a "Final
Remedial Action Report [] and Classification Exception Area [(CEA)]Proposal"
to the DEP. Referring to its supplemental investigation in 1996, JMS "proposed
to remediate [a] relatively limited area of contaminated soil" and conduct
additional groundwater sampling. Groundwater samples taken from the
monitoring well adjacent to the former diesel tank excavation area showed a
further decrease in the concentration of benzene, though still in excess of DEP
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groundwater quality standards, and that neither of the other two wells "exhibited
levels of groundwater contamination . . . consistently above" DEP standards.
On May 12, DEP issued Suburban a "NO FURTHER ACTION [(NFA)]
Letter and COVENANT NOT TO SUE" where it "acknowledg[ed] the
completion of a Remedial Investigation and Remedial Action pursuant to the
Technical Requirements for Site Remediation (N.J.A.C. 7:26E)[,] for the former
diesel fuel oil, gasoline[,] and waste oil underground storage tank Areas of
Concern and no other areas." The NFA letter acknowledged that DEP "relied
upon the certified representations and information provided to" it and that its
determination was conditioned on Suburban Propane having not "withh[e]ld any
information from" the DEP. The NFA letter imposed a CEA and well restricted
area on the property, suspending the use of groundwater within the area for
fourteen years or until Suburban demonstrated that benzene contamination no
longer exceeded groundwater quality standards. Standards for all other
substances remained in effect within the CEA. Suburban and its successors were
also required to "conduct monitoring for compliance and effectiveness of [this]
institutional control . . . and submit a certification to the [DEP] every two years
in writing that the institutional control [was] being properly maintained."
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B.
Property Sale
On February 8, 2000, Glenn,1 who owned a lot adjacent to the property
since August 1985, entered into a written contract (the contract) with Suburban
to purchase the property "as is" for $285,000. According to the contract's
paragraph six, Suburban "disclosed all known and suspected environmental
conditions that may impact the [property], including but not limited to those
conditions set forth in the January 1991 'Proposed Tank Closure Plan,'" and the
1991 "Site Assessment Summary Report" prepared by JMS and in the NFA
letter, "as well as unconfirmed conditions set forth in verbal communications
concerning possible burial of propane tanks and/or cylinders on the [property]."
The paragraph also reflected that Glenn "agree[d] to assume and accept all
obligations and responsibilities for said known and suspected environmental
conditions."
In paragraph eight, Glenn was afforded the right to conduct
"investigations, engineering tests, test borings, percolation and other soil and
ground water tests, and any other tests as may be necessary to determine [the
1
Because Glenn and Gail Wertheim have the same surname, we refer to them
by their first names to avoid confusion. We mean no disrespect.
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property's] physical conditions which, in [his] sole discretion, will interfere with
or prevent the transfer or use of the [property] for [which he] desired." It also
gave him the right to terminate the contract if he "reasonably determine[d] that
the physical condition of the [property was] in any way contaminated with any
hazardous substance."
Under paragraph five, Glenn, "as of the [c]losing [d]ate," expressly
waived all claims regarding the conditions of the "water, soil and geology[,]" or
"any hazardous materials in, at, on, under or related to the [property]," unless he
terminated the contract in accordance with his investigation and study of the
property. Yet, the contract warned of "unconfirmed conditions set forth in
verbal communications concerning possible burial of propane tanks and/or
cylinders on the [property]" in addition to the "conditions set forth in the" 1991
reports (Underground Storage Tank Closure Plan and Site Assessment) and NFA
letter.
Before the property's closing, Suburban provided plaintiffs with copies of
the 1991 reports it received from JMS. Glenn received no other documentation
from Suburban, thus plaintiffs asserted in discovery that their knowledge of
known or suspected environmental conditions on the property "was limited
to . . . the two 1991 reports and the NFA" letter. Significantly, he did not
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exercise his right to have the property investigated or studied for environmental
issues. Nor did he contact anyone at JMS prior to closing regarding its
remediation work on the property, despite knowing JMS's owner "for a number
of years" and having worked with him in the past.
Three days prior to the property's closing on April 11, 2000, the contract
was amended to reflect that the property will be deeded to Gail, not Glenn.
Plaintiffs said this was done "to avoid a premature merger of estates with the
adjoining lot" Glenn owned.
C.
Property Conveyance to Sunway Equity/Contamination Discovery
Over ten years after the property was deeded to Gail, she conveyed it to
Sunway Equity, which she and Glenn solely owned, on September 20, 2010.
Within two days, the adjacent lot Glenn owned was consolidated with the
property, and plaintiffs executed a land lease agreement with Wawa, Inc. for the
property. At the time, the property was leased to Somerset Hills Towing for its
offices and parking. That lease ceased in May 2015, and the property was turned
over to Wawa for its development.
In February 2016, Wawa discovered the property was contaminated with
various hazardous substances, including substantial quantities of arsenic.
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Excavation work also found extensive steel piping in the soil near the former
diesel tank excavation.
D.
Litigation
In April 2017, plaintiffs sued Suburban, JMS, Sovereign Consulting Inc.
(Sovereign), and Brockerhoff Environmental Services, LLC (Brockerhoff).
JMS was sued for negligence and violation of New Jersey Spill Compensation
and Control Act (Spill Act), N.J.S.A. 58:10-23.11 to -23.24. Only claims against
JMS are relevant to this appeal. 2
On November 29, the trial court granted JMS's summary judgment as to
the Spill Act claims 3 but denied the motion without prejudice as to the
negligence claim, to permit additional discovery.
On January 31, 2020, following the end of discovery, JMS refiled its
motion for summary judgment to dismiss the negligence claim. On April 20,
the court issued an order and oral decision granting summary judgment to JMS,
2
Plaintiffs' claims against other defendants were dismissed as follows:
Suburban – negligence, breach of contract, and equitable fraud claims were
dismissed with prejudice but claims under the Spill Act were dismissed without
prejudice; Brockerhoff – all claims were voluntarily dismissed without
prejudice; and Sovereign – all claims were voluntarily dismissed with prejudice.
3
The dismissal of these claims is not being appealed.
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holding plaintiffs' negligence claim was barred by the statute of limitations and
JMS did not owe a duty to plaintiffs.
II.
Plaintiffs appeal the April 20 summary judgment order, arguing:
POINT I
[JMS] HAD A DUTY TO PLAINTIFF[S].
POINT II
THE PLAINTIFF[S] HA[VE] A VIABLE ACTION
AGAINST [JMS] FOR NEGLIGENCE.
POINT III
PLAINTIFF[S'] ACTION IS NOT TIME BARRED.
We review the trial court's decision on a summary judgment motion de
novo. Giannakopoulos v. Mid State Mall, 438 N.J. Super. 595, 599 (App. Div.
2014). We utilize the same standard as the court and consider "whether the
competent evidential materials presented, when viewed in the light most
favorable to the non-moving party, are sufficient to permit a rational factfinder
to resolve the alleged disputed issue in favor of the non-moving party." Brill v.
Guardian Life Ins. Co. of Am., 142 N.J. 520, 540 (1995).
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A.
Initially, we address plaintiffs' challenge to the summary judgment
dismissal of their negligence claim because it is time-barred. They do not
dispute that the six-year statute of limitations under N.J.S.A. 2A:14-1 applies to
their claim. Rather, they argue their cause of action did not accrue until
February 2016, when Wawa discovered the property was contaminated, because
JMS's negligence was "camouflaged by the NFA letter, the CEA[,] and the
incomplete set of documents submitted by Suburban[,]" which "together
concealed the [contamination] from" them. We are unpersuaded.
The running of the statute of limitations begins when the plaintiff is aware
"through the exercise of reasonable diligence, the facts that form the basis for
an actionable claim against an identifiable defendant." The Palisades at Ft. Lee
Condo. Ass'n, Inc. v. 100 Old Palisade, LLC, 230 N.J. 427, 435 (2017) (citing
Caravaggio v. D'Agostini, 166 N.J. 237, 246 (2001)). "[T]he burden [is] on the
plaintiff seeking application of the discovery rule to show that a reasonable
person in her [or his] circumstances would not have been aware, within the
prescribed statutory period, that she [or he] had been injured by [the]
defendant[']s" conduct. Kendall v. Hoffman-La Roche, Inc., 209 N.J. 173, 197-
98 (2012). "The discovery rule is essentially a rule of equity," taking into
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consideration fairness to the plaintiff and the defendant. Lopez v. Swyer, 62
N.J. 267, 273 (1973). A hearing is necessary when there is a factual dispute
concerning the date of the discovery. J.P. v. Smith, 444 N.J. Super. 507, 528
(App. Div. 2016). The trial court's determination of "whether a cause of action
is barred by a statute of limitations is a question of law that we review de novo."
Save Camden Pub. Schs. v. Camden City Bd. of Educ., 454 N.J. Super. 478, 487
(App. Div. 2018) (citing Catena v. Raytheon Co., 447 N.J. Super. 43, 52 (App.
Div. 2016)).
We reject plaintiffs' contention that the tolling of the statute of limitations
started in February 2016, when Wawa's investigation uncovered contaminants
in the property. The clock began on April 11, 2000, when Gail took ownership
of the property and plaintiffs reasonably could have known of its contamination
had they exercised due diligence. The contract to buy the property from
Suburban put plaintiffs on notice that it had preexisting environmental issues.
The 1991 Site Assessment Report and the NFA letter given to Glenn by
Suburban did not represent that the entire property was examined and found to
be uncontaminated. The documents clearly stated that JMS's remediation plan
was limited to the removal and clean-up associated with the three underground
tanks––covering one percent of the property's total area—and nothing else. JMS
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did not withhold any information relevant to its work which hampered plaintiffs'
ability to determine whether the property was contaminated. Any deficiency of
the documentation provided to plaintiffs did not affect the running of the statute
of limitations; it was their failure to exercise due diligence by not asking for the
documentation they now claim Suburban did not provide.
The contract permitted Glenn to obtain all JMS and DEP records pertinent
to JMS's remediation in Suburban possession, to have the property
professionally investigated, and to terminate the contract without liability if
harzardous conditions were found on the property. There is no equitable basis
to toll the six-year statute of limitations period until February 2016, almost
sixteen years after Gail took ownership of the property in April 2000. Simply
put, plaintiffs' conduct was unreasonable by failing to exercise contractual rights
to obtain all the property's pertinent environmental records and conduct an
investigation regarding the property's environmental condition.
We see no merit in plaintiffs' argument that the court erred in not
conducting a plenary hearing regarding the discovery of the property's
contamination. There was no factual dispute as to their lack of due diligence in
uncovering the property's contamination before they acquired the property.
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Plaintiffs do not identify any specific material disputed fact or reasonable
inference denied to them that alters our reasoning.
Having concluded the statute of limitations commenced on April 11, 2000,
plaintiffs had six years thereafter to file suit against JMS. They did not do so
until April 2017, which was too late. Hence, the court properly granted
summary judgment dismissal of plaintiffs' complaint as time-barred.
B.
Although we have concluded plaintiffs' negligence claim was properly
dismissed as being time-barred, for the sake of completeness, we also address
the court's finding that the claim should also be dismissed because JMS owed
no duty to plaintiffs with respect to its remediation work at the property.
Plaintiffs argue it was reasonably foreseeable buyers of the property would rely
on the NFA letter and the 1991 reports in deciding to purchase the property, and
therefore, if JMS's reports were "negligently generated, incomplete[,] and
misleading," injury to them as subsequent buyers of the property was also
reasonably foreseeable. They maintain that failing to impose a duty on JMS
here would mean that "[a]ll prior investigations would have to be repeated with
each succeeding transaction[,]" imposing a considerable economic burden on
the sale of real estate. They also argue that it would "curtail the reliance by
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subsequent hydrogeologists and [licensed site remediation professionals
(LSRPs)] upon the existing database at the DEP[,]" which in turn would make
"environmental compliance . . . chaos." We do not favor these arguments.
In a negligence action, a plaintiff has the burden to prove a defendant
owed him or her a duty of care that was breached, which was the proximate
cause of injury. D'Alessandro v. Hartzel, 422 N.J. Super. 575, 579 (App. Div.
2011). Whether a duty exists is a matter of law decided by the court, not the
factfinder. Siddens v. Cook, 382 N.J. Super. 1, 8 (App. Div. 2005) (citing
Rogers v. Bree, 329 N.J. Super. 197, 201 (App. Div. 2000)). Similar to
application of the above noted statute of limitations discovery rule, whether a
duty of care exists is a question "of fairness and policy that implicates many
factors." Carvalho v. Toll Bros. & Devs., 143 N.J. 565, 572 (1996). "The
foreseeability of harm is a significant consideration in the determination of a
duty to exercise reasonable care." Ibid. However, the foreseeability of "injury
to a potential plaintiff does not in itself establish the existence of a duty." Ibid.(quoting Carter Lincoln-Mercury, Inc. v. EMAR Grp., Inc., 135 N.J. 182, 194
(1994)).
"Once the foreseeability of an injured party is established, . . .
considerations of fairness and policy govern whether the imposition of a duty is
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warranted." Id. at 573 (alteration in original) (quoting Carter Lincoln-Mercury,
Inc., 135 N.J. at 194-95). In considering the fairness and policy implications of
imposing a duty, courts identify, weigh, and balance four factors: "the
relationship of the parties, the nature of the attendant risk, the opportunity and
ability to exercise care, and the public interest in the proposed solution." Ibid.(quoting Hopkins v. Fox & Lazo Realtors, 132 N.J. 426, 439 (1993)).
"[W]hereas the foreseeability inquiry is rooted in the specific facts of a
particular case, the fairness and policy inquiry focuses on the ability to derive
from those facts a general rule that can 'sensibly, predictably, and fairly govern
future conduct.'" Coleman v. Martinez, 247 N.J. 319, 342-43 (2021) (quoting
Est. of Desir ex rel. Estiverne v. Vertus, 214 N.J. 303, 330 (2013)).
Even where a person did not hire a professional, a duty of care may be
imposed on an injured third party who reasonably and foreseeably "relied upon
the representation of the professional." Rezem Fam. Assocs., LP v. Borough of
Millstone, 423 N.J. Super. 103, 121 (App. Div. 2011) (quoting Zielinski v. Pro.
Appraisal Assocs., 326 N.J. Super. 219, 226 (App. Div. 1999)). Thus, in Petrillo
v. Bachenberg, 139 N.J. 472, 486-89 (1995), the Court held the attorney of a
seller of real estate owed a duty of care to the buyer for a misleading report of
percolation tests produced by the attorney which did not fully detail the number
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of failed percolation tests that the attorney knew or should have known the buyer
would rely upon on in purchasing the property. However, for different reasons,
we held in Zielinski, it was unfair to impose a duty of care upon an appraiser to
the buyer of a property where the appraisal was for the lender and not seen by
the buyer, because it was not an opinion of the property's condition to be
reasonably relied upon by the buyer regarding the property's defects. 326 N.J.
Super. at 224-26. Moreover, the appraisal contained a "disclaimer regarding
structural and engineering defects." Ibid. at 227.
Plaintiffs never saw the 1998 report on which DEP expressly relied upon
in issuing the NFA letter. It was unreasonable for them to solely rely on the
NFA letter to not conduct their own environmental investigation of the property
when the letter expressly applied only to the "underground storage tank Areas
of Concern." Prior to the property's closing, they did not obtain or ask for the
attachments to the 1991 site assessment report, which Suburban provided them.
Had they done so, they would have been aware of the arsenic finding and
disposal of hazardous soil that were mentioned in those attachments. JMS was
not responsible for them not receiving all its remediation-related reports.
Nevertheless, based on the documentation plaintiffs received prior to closing,
they knew JMS's limited remediation was successful, but they still should have
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reasonably concluded it was necessary to retain an environmental consultant to
investigate the property's condition.
Unlike the attorney in Petrillo, JMS's opportunity to exercise care to avoid
reliance on their work product was limited. Nothing here suggests that JMS was
responsible for plaintiffs not receiving all of JMS's reports, as was the situation
in Petrillo. JMS's duty stopped was limited to sending all of its reports and
correspondence to Suburban. And while the attorney in Petrillo "should have
foreseen that [the plaintiff] would rely on the total number of percolation tests"
reflected in the composite report he submitted to the broker, 139 N.J. at 487,
JMS could not have foreseen reliance on any particular combination of
incomplete documents that Suburban decided to submit to a buyer, or on the
resulting nondisclosure of facts that JMS disclosed to Suburban and DEP .
Furthermore, there is no fairness or policy interest in imposing a duty of
care on JMS. Finding a duty would unreasonably disregard any reliance on
documented remedial actions and NFA letters. A buyer who purchases a
property with a known history of contamination "as is" and without any
independent investigation, in reliance on a facially incomplete record of
remediation and an NFA letter that applies only to a portion of a property, does
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so at his or her own risk. As this describes plaintiffs' conduct, they should not
be able to pursue negligence claims against JMS.
Although the dismissal of plaintiffs' Spill Act claims are not being
appealed, the act is relevant to evaluating the fairness or policy interest. It
provides the owner of a contaminated property can avail themselves of an
"innocent purchaser" defense and avoid liability for cleanup and removal costs
by showing that: (1) "the person acquired the real property after the discharge"
occurred; (2) "at the time the person acquired the real property, the person did
not know and had no reason to know that any hazardous substance had been
discharged at the real property"; (3) "the person did not discharge the hazardous
substance [and] is not in any way responsible for the hazardous substance"; and
(4) "the person gave notice of the discharge to [DEP] upon actual discovery of
that discharge." N.J.S.A. 58:10-23.11g(d)(2). "To establish that a person had
no reason to know that any hazardous substance has been discharged . . . the
person must have undertaken, at the time of acquisition, all appropriate inquiry
into the previous ownership and uses of the property[,]" which in turn requires
"the performance of a preliminary assessment, and site investigation, if the
preliminary assessment indicates that a site investigation is necessary." Ibid.A-4360-19
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Because plaintiffs did not conduct their own environmental assessment of
the property, they cannot claim they were innocent purchasers under the Spill
Act, nor can they seek invocation of comparative negligence to avoid summary
judgment. Consequently, there is no fairness or policy reason to impose any
duty on JMS, which remediated the property and obtained an NFA letter in
accordance with its duty to Suburban, with respect to plaintiffs.
To the extent we have not addressed any remaining issues, we find they
lack sufficient merit to warrant discussion in a written opinion. R. 2:11-
3(e)(1)(E).
Affirmed.
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