Analytical Measurements v. Keuffel & Esser Co.

• Decision Date: 28 October 1993
• Docket Number: Civ. No. 89-2512.
• Citation: 843 F. Supp. 920
• Parties: ANALYTICAL MEASUREMENTS, INC.; (a NJ corporation held in trust by Ella May Paully and Theresa Scarinzi), and Ella May Paully (individually), Plaintiffs, v. The KEUFFEL & ESSER COMPANY; and The Azon Corporation, Defendants.
• Court: U.S. District Court — District of New Jersey

843 F. Supp. 920

ANALYTICAL MEASUREMENTS, INC.; (a NJ corporation held in trust by Ella May Paully and Theresa Scarinzi), and Ella May Paully (individually), Plaintiffs, v. The KEUFFEL & ESSER COMPANY; and The Azon Corporation, Defendants.

Civ. No. 89-2512.

United States District Court, D. New Jersey.

October 28, 1993.

COPYRIGHT MATERIAL OMITTED

George J. Grochala, Morristown, NJ, for plaintiffs.

John H. Klock, Maria T. Nersesian, Crummy, Del Deo, Dolan, Griffinger & Vecchione, Newark, NJ, for defendants Azon Corp. and Keuffel & Esser Co.

OPINION

DEBEVOISE, District Judge.

Defendants, Azon Corporation ("Azon") and Keuffel & Esser Company ("K & E"), move for summary judgment pursuant to Fed.R.Civ.P. 56 on Counts One through Six in plaintiffs Analytical Measurements, Inc.'s and the Estate of Ella May Paully's Second Amended Complaint. Plaintiffs cross-move for partial summary judgment.

Because plaintiffs are no longer proceeding against defendants regarding their statutory claims under the Environmental Cleanup Responsibility Act ("ECRA"), N.J.STAT.ANN. § 13:1K-6 et seq., the Resource Conservation and Recovery Act ("RECRA"), 42 U.S.C. § 6901 et seq., the Toxic Substances Control Act ("TSCA"), 15 U.S.C. § 2601 et seq., The Clean Water Act, 33 U.S.C. § 1251 et seq., and the Water Pollution Control Act, N.J.STAT.ANN. § 58:10A-1 et seq.; defendants' motion regarding these claims is granted and they are dismissed.

For the following reasons, defendants' motion is granted on the breach of covenant against encumbrances claim and plaintiffs' motion is granted as to liability on the Spill Act claim, subject to a determination whether Azon is liable by virtue of its purchase of K & E. The remaining claims contain factual issues which preclude their being decided on this motion.

SUMMARY OF FACTS AND PROCEDURAL HISTORY

A. Background

Plaintiff the Estate of Ella May Paully¹ is the owner of property located at 31 Willow Street in Chatham, New Jersey (the "Property"). Since 1967, plaintiff Analytical Measurements, Inc. ("Analytical") has rented the Property. Analytical is a New Jersey corporation with its principal place of business in New Jersey. Analytical is owned and operated by a trust with the Estate of Ella May Paully and Theresa Scarinzi serving as trustees.

Ella May Paully's husband, Frank Paully,² purchased the Property from K & E in 1967. K & E is a California corporation with its principal place of business in New Jersey. Between approximately 1947 and 1967, K & E owned the Property and operated a photosensitive paper coating factory which was commonly known as the "Redon" plant (hereinafter referred to as "Redon Plant" or "Chatham Facility"). Among other things, diazo dye was used by K & E to coat rolls of paper at the Property during this period. Such coated paper was commonly used as blueprint paper by architects, engineers and other draftsmen.

K & E used many different formulations of diazo dye over the years. Various chemicals, including zinc and zinc chloride were constituents of some of those formulas. Prior to 1951, the liquid chemical wastes from the factory flowed from the floor drains, through underground pipes, to a ditch located off site on adjacent property owned by a railroad. In approximately 1951, some of the chemical waste reached the Passaic River and complaints were registered by the Passaic County Water Commission. As a result, K & E revised its system of chemical waste disposal whereby the floor drains emptied, through underground piping, into a "lagoon" at the rear of the property. The lagoon was constructed with a bulldozer in approximately 1952. Sometime within the next few years, the first lagoon became clogged due to precipitate from the waste and a second lagoon was constructed. From that time until the Redon Facility moved to Rockaway, New Jersey in approximately 1966, both lagoons were used alternately for the disposal of chemical waste. The extent of Frank Paully's knowledge concerning the lagoons is disputed.

In 1982, K & E was taken over in a tender offer transaction by a company known as Kratos Corporation which eventually went into bankruptcy. In 1986, Azon purchased the former K & E.

This suit arose from Ella Paully's thwarted attempt to sell the Property which Analytical now leases. On March 24, 1988 Paully entered into a contract to sell the Property to the G.J.L. Corporation ("G.J.L.") for between $2,100,000 and $3,400,000. Under a New Jersey State law enacted in 1983, before selling an industrial site, certification that the land is not contaminated must be obtained from the State. See Environmental Cleanup Responsibility Act ("ECRA") N.J.STAT.ANN. § 13:1K-6 et seq. The State found that the Property and adjoining property were contaminated by hazardous substances and wastes such as asbestos, petroleum hydrocarbons and diazo dye waste, the chemical used by K & E for coating its paper products. The State held both Paully and Analytical jointly and severally strictly liable for the cost of cleaning the Property. Analytical was subject to ECRA by reason of its manufacture of ph meters on the property. Because of the contamination G.J.L. filed a lawsuit in 1990 to rescind the contract. The contract subsequently expired automatically in November 1992, after neither party could perform on the last date set for closing.

B. Cleanup

Pursuant to directives from The New Jersey Department of Environmental Protection and Energy "NJDEPE", plaintiffs excavated 8,400 tons of soil contained in the lagoon and floor drain A. The first 600 tons of zinc and petroleum hydrocarbon contaminated soil were disposed of at an approved landfill in Ohio, at plaintiffs' expense. However, based upon a change in New Jersey's waste flow policy, an additional 7,800 tons of similarly contaminated soil were disposed of at the Hackensack Meadowlands landfill for use as recyclable daycover. Plaintiffs claim that this excavation and relocation took years to complete because plaintiffs exhausted their funds in 1989 and K & E refused to provide any assistance until after May 1990 and again in May 1991. In May of 1990, K & E provided $190,000 in initial funding under an Interim Cost Sharing Agreement ("Agreement"). The Agreement was designed to allow K & E to fund a portion of the ongoing cleanup in order to mitigate the potential damages against it in this case. These moneys funded portions of continuing work, such as the disposal of the remaining excavated lagoon soil at the Hackensack Meadowlands Landfill and the implementation of the groundwater investigation plan. In 1991, K & E agreed to pay an additional $183,000 under the Agreement. As a result, to date K & E has paid a total of $373,000 toward the cleanup.

Prior to K & E providing initial funding and assistance in May of 1990, plaintiffs spent $264,324.76 to begin the initial soil and groundwater investigation, analyze the problems and alternatives, excavate the soil, and remove the first 600 tons of soil to Ohio. They subsequently spent $22,397.25 for the design of a groundwater investigation plan. It is these $286,722.01 in past expenses that plaintiffs still seek from K & E.³ Thereafter, plaintiff expended another $2,967.47 for groundwater well sealing and closure. Plaintiffs total unreimbursed expenses for investigation, analysis and cleanup total $289,689.48.

In 1991, NJDEPE approved the cleanup and issued ECRA clearance for the property.

C. Procedural History

Plaintiffs instituted this action to obtain contribution from defendants for clean-up of the site. Plaintiffs filed the original Complaint on or about May 16, 1989 in the Superior Court of New Jersey, Law Division, Morris County. Defendants filed a Notice of Removal to this Court on or about June 5, 1989. After a Consent Order Extending Time to Answer was filed, K & E and Azon answered the Complaint on or about August 4, 1989. A motion to remand the case to Superior Court was denied by Order entered on or about January 9, 1990.

Plaintiffs filed a First Amended Complaint on or about February 27, 1990. Defendants answered the First Amended Complaint on or about April 26, 1990. Two substantive motions have previously been decided in this case. First, on August 24, 1992 I denied K & E's motion to enforce a settlement agreement. Second, on February 9, 1993, I granted in part and denied in party Alfred Busch's motion for summary judgment. 816 F.Supp. 291. Thereafter, the individual defendants (William Keller, Robert Keller and Alfred Busch) settled with plaintiffs. The only remaining defendants in this case are K & E and Azon.

Subsequently, plaintiffs filed a Second Amended Complaint against K & E and Azon on or about February 1, 1993, which defendants answered on or about March 16, 1993. The present motions concern the Second Amended Complaint which contains the following claims: (Count I) Nuisance; (Count II) Breach of Covenants and Deeds; (Count III) Strict Liability; (Count IV) Statutory Violations under state and federal law; (Count V) Indemnification; and (Count VI) Contribution.

There has been full discovery in this case. Numerous depositions have been taken, and interrogatories and documents have been exchanged.

STANDARD OF REVIEW

Summary judgment is appropriate where the moving party establishes that "there is no genuine issue of material fact and that it is entitled to a judgment as a matter of law." Fed.R.Civ.P. 56(c) The moving party must show that if the evidentiary material of record were reduced to admissible evidence in court, it would be insufficient to permit the non-moving party to carry its burden of proof. Celotex Corp. v. Catrett, 477 U.S. 317, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986).

Once the moving party has carried its burden under Rule 56, "its opponent must do more than simply show that there is some metaphysical doubt as to the material facts in question." Matsushita Electric Industrial Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 106 S.Ct....