State, Dept. of Environmental Protection v. Ventron Corp.

• Decision Date: 21 July 1983
• Citation: 94 N.J. 473,468 A.2d 150
• Parties: , 19 ERC 1505, 13 Envtl. L. Rep. 20,837 STATE of New Jersey, DEPARTMENT OF ENVIRONMENTAL PROTECTION, Plaintiff- Respondent, v. VENTRON CORPORATION, a Massachusetts corporation; Wood Ridge Chemical Corporation, a Nevada corporation and Velsicol Chemical Corporation, Defendants-Appellants, and Robert M. Wolf & Rita W. Wolf, his wife, Defendants-Respondents, and United States Life Insurance Company, a New York corporation and F.W. Berk and Company, Inc., Defendants. and ROVIC CONSTRUCTION CO., INC., a corporation of the State of New Jersey, by its Statutory Receiver, Joseph KEANE, Intervenor-Plaintiff, v. VENTRON CORPORATION, a Massachusetts corporation; Wood Ridge Chemical Corporation, a Nevada corporation; Velsicol Chemical Corporation and F.W. Berk & Co., Inc., Defendants. and MOBIL OIL CORPORATION, Chevron U.S.A., Inc., Texaco, Inc. and Exxon Company, U.S.A., foreign corporations authorized to do business in the State of New Jersey, Plaintiffs, v. STATE of New Jersey, DEPARTMENT OF ENVIRONMENTAL PROTECTION and State of New Jersey, Department of the Treasury, Spill Compensation Fund, Defendants.
• Court: New Jersey Supreme Court

Page 473

94 N.J. 473

468 A.2d 150, 19 ERC 1505, 13 Envtl.

L. Rep. 20,837

STATE of New Jersey, DEPARTMENT OF ENVIRONMENTAL PROTECTION, Plaintiff- Respondent, v. VENTRON CORPORATION, a Massachusetts corporation; Wood

Ridge Chemical Corporation, a Nevada corporation

and Velsicol Chemical Corporation,

Defendants-Appellants,

and

Robert M. Wolf & Rita W. Wolf, his wife, Defendants-Respondents,

and

United States Life Insurance Company, a New York corporation

and F.W. Berk and Company, Inc., Defendants.

and

ROVIC CONSTRUCTION CO., INC., a corporation of the State of

New Jersey, by its Statutory Receiver, Joseph

KEANE, Intervenor-Plaintiff, v. VENTRON CORPORATION, a Massachusetts corporation; Wood

Ridge Chemical Corporation, a Nevada corporation;

Velsicol Chemical Corporation and F.W.

Berk & Co., Inc., Defendants.

and

MOBIL OIL CORPORATION, Chevron U.S.A., Inc., Texaco, Inc.

and Exxon Company, U.S.A., foreign corporations

authorized to do business in the State

of New Jersey, Plaintiffs, v. STATE of New Jersey, DEPARTMENT OF ENVIRONMENTAL PROTECTION and State of New Jersey, Department of the

Treasury, Spill Compensation Fund, Defendants.

Supreme Court of New Jersey.

Argued Jan. 10, 1983.

Decided July 21, 1983.

Harry R. Hill, Jr., Trenton, for defendants-appellants Ventron Corp., etc., et al. (Backes, Waldron & Hill, attorneys; Michael J. Nizolek, Trenton, on brief).

Adrian M. Foley, Jr., Newark, for defendant-appellant Velsicol Chemical Corp. (Connell, Foley & Geiser, Newark, attorneys; Adrian M. Foley, Jr., and John F. Neary, Newark, of counsel; John F. Neary, Newark, on the briefs). Murry D. Brochin, Millburn, for defendants-respondents Robert M. Wolf, et al. (Lowenstein, Sandler, Brochin, Kohl, Fisher & Boylan, Roseland, attorneys; Deanne Wilson Plank, Rutherford, on the brief).

Ronald P. Heksch, Deputy Atty. Gen., for plaintiff-respondent State of N.J., etc. (Irwin I. Kimmelman, Atty. Gen. of N.J., attorney; Michael R. Cole, Asst. Atty. Gen., of counsel).

Barry H. Evenchick, Livingston, Sp. Counsel, submitted a letter in lieu of brief on behalf of State of N.J., Dept. of the Treasury, Spill Compensation Fund.

The opinion of the Court was delivered by

POLLOCK, J.

This appeal concerns the responsibility of various corporations for the cost of the cleanup and removal of mercury pollution seeping from a forty-acre tract of land into Berry's Creek, a tidal estuary of the Hackensack River that flows through the Meadowlands. The plaintiff is the State of New Jersey, Department of Environmental Protection (DEP); the primary defendants are Velsicol Chemical Corporation (Velsicol), its former subsidiary, Wood Ridge Chemical Corporation (Wood Ridge), and Ventron Corporation (Ventron), into which Wood Ridge was merged. Other defendants are F.W. Berk and Company, Inc. (Berk), which no longer exists, United States Life Insurance Company, which was dismissed by the lower courts in an unappealed judgment, and Robert M. and Rita W. Wolf (the Wolfs), who purchased part of the polluted property from Ventron.

Beneath its surface, the tract is saturated by an estimated 268 tons of toxic waste, primarily mercury. For a stretch of several thousand feet, the concentration of mercury in Berry's Creek is the highest found in fresh water sediments in the world. The waters of the creek are contaminated by the compound methyl mercury, which continues to be released as the mercury interacts with other elements. Due to depleted oxygen levels, fish no longer inhabit Berry's Creek, but are present only when swept in by the tide and, thus, irreversibly toxified.

The contamination at Berry's Creek results from mercury processing operations carried on at the site for almost fifty years. In March, 1976, DEP filed a complaint against Ventron, Wood Ridge, Velsicol, Berk, and the Wolfs, charging them with violating the "New Jersey Water Quality Improvement Act of 1971," N.J.S.A. 58:10-23.1 to -23.10, and N.J.S.A. 23:5-28, and further, with creating or maintaining a nuisance. The defendants cross-claimed against each other; Velsicol and Ventron counterclaimed against DEP, which amended its complaint to allege the violation of the "Spill Compensation and Control Act" (Spill Act), N.J.S.A. 58:10-23.11 to -23.11z (repealing N.J.S.A. 58:10-23.1 to -23.10), enacted in 1977. The Spill Compensation Fund (Fund), created by the Spill Act to provide funds to abate toxic nuisances, N.J.S.A. 58:10-23.11i, intervened.

Because of issues related to the liability of the Fund, a number of its contributors (Mobil Oil Corporation; Chevron U.S.A., Inc.; Texaco, Inc.; and Exxon Company, U.S.A.) filed a complaint, later consolidated with the present action, seeking a declaratory judgment that the Spill Act not be retroactively applied to discharges of toxic wastes occurring before the effective date of the act.

After a fifty-five-day trial, the trial court determined that Berk and Wood Ridge were jointly liable for the cleanup and removal of the mercury; that Velsicol and Ventron were severally liable for half of the costs; that the Wolfs were not liable; and that, while the Spill Act liability provisions did not apply retroactively, monies from the Fund should be made available. The trial court also granted judgment in favor of the Wolfs on their cross-claim against Ventron for fraudulent nondisclosure of mercury pollution in the sale of part of the tract. That judgment included an award of costs and counsel fees incurred by the Wolfs in their defense of the DEP action. Following the entry of judgment, the trial court entered a "Procedural Order Involving Remedy," which approved for submission to the United States Army Corps of Engineers the DEP plan for the cleanup of Berry's Creek.

The Appellate Division substantially affirmed the judgment, but modified it in several respects, including the imposition of joint and several liability on Ventron and Velsicol for all costs incurred in the cleanup and removal of the mercury pollution in Berry's Creek. 182 N.J.Super. 210, 224-26, 440 A.2d 455 (1981). Because of an amendment to the Spill Act after the trial, the Appellate Division further modified the judgment by imposing retroactive liability under the act on Wood Ridge, Velsicol, and Ventron. Id. at 219-22, 440 A.2d 455. Furthermore, the Appellate Division precluded payments from the Fund if other sources were available to pay for the cleanup, id. at 228, 440 A.2d 455, and approved the future monitoring of Berry's Creek at the expense of Velsicol and Ventron. Id. at 229, 440 A.2d 455.

We granted certification to consider the retroactive application of the Spill Act, the liability of Velsicol for the removal of mercury pollution in Berry's Creek, and the liability, including costs and counsel fees, of Ventron to the Wolfs for fraudulent non-disclosure. 91 N.J. 195, 450 A.2d 530 (1982). Thereafter we denied motions by Wood Ridge, Velsicol, and Ventron to stay the enforcement of the judgment. We modify and affirm the judgment of the Appellate Division.

I

From 1929 to 1960, first as lessee and then as owner of the entire forty-acre tract, Berk operated a mercury processing plant, dumping untreated waste material and allowing mercury-laden effluent to drain on the tract. Berk continued uninterrupted operations until 1960, at which time it sold its assets to Wood Ridge and ceased its corporate existence.

In 1960, Velsicol formed Wood Ridge as a wholly-owned subsidiary for the sole purpose of purchasing Berk's assets and operating the mercury processing plant. In 1967, Wood Ridge subdivided the tract and declared a thirty-three-acre land dividend to Velsicol, which continued to permit Wood Ridge to dump material on the thirty-three acres. As a Velsicol subsidiary, Wood Ridge continued to operate the processing plant on the 7.1-acre tract from 1960 to 1968, when Velsicol sold Wood Ridge to Ventron.

Although Velsicol created Wood Ridge as a separate corporate entity, the trial court found that Velsicol treated it not as an independent subsidiary, but as a division. From the time of Wood Ridge's incorporation until the sale of its capital stock to Ventron, Velsicol owned 100% of the Wood Ridge stock. All directors of Wood Ridge were officers of Velsicol, and the Wood Ridge board of directors met monthly in the Velsicol offices in Chicago. At the meetings, the board not only reviewed financial statements, products development, and public relations, but also the details of the daily operations of Wood Ridge. For example, the Wood Ridge board considered in detail personnel practices, sales efforts, and production. Velsicol arranged for insurance coverage, accounting, and credit approvals for Wood Ridge. Without spelling out all the details, we find that the record amply supports the conclusion of the trial court that "Velsicol personnel, directors, and officers were constantly involved in the day-to-day operations of the business of [Wood Ridge]."

In 1968, Velsicol sold 100% of the Wood Ridge stock to Ventron, which began to consider a course of treatment for plant wastes. Until this time, the waste had been allowed to course over the land through open drainage ditches. In March 1968, Ventron engaged the firm of Metcalf & Eddy to study the effects of mercury on the land, and three months later, Ventron constructed a weir to aid in monitoring the effluent.

Ventron's action was consistent with a heightened sensitivity in the 1960's to pollution problems. Starting in the mid-1960's, DEP began testing effluent on the tract, but did not take any action against Wood Ridge. The trial court found, in fact, that the defendants were not liable under intentional tort or negligence theories.

Nonetheless, in 1970, the contamination at Berry's Creek came to the attention of the United States Environmental Protection Agency (EPA), which conducted a test of Wood Ridge's waste water. The tests indicated that the effluent carried two to four pounds of mercury into Berry's Creek...