Dixon Venture v. Joseph Dixon Crucible Co.

• Decision Date: 30 January 1991
• Citation: 584 A.2d 797,122 N.J. 228
• Parties: , 32 ERC 1780 The DIXON VENTURE, A New Jersey Partnership, Plaintiff-Respondent, v. The JOSEPH DIXON CRUCIBLE COMPANY, a New Jersey Corporation, Dixon Ticonderoga Company, a Delaware Corporation, and Their Successors and Assigns, Defendants-Appellants.
• Court: New Jersey Supreme Court

Page 228

122 N.J. 228

584 A.2d 797, 32 ERC 1780

The DIXON VENTURE, A New Jersey Partnership, Plaintiff-Respondent, v. The JOSEPH DIXON CRUCIBLE COMPANY, a New Jersey Corporation Dixon Ticonderoga Company, a Delaware Corporation and Their Successors and Assigns Defendants-Appellants.

Supreme Court of New Jersey.

Argued Oct. 9, 1990.

Decided Jan. 30, 1991.

Julian Wilsey, for defendants-appellants (Greenberg Margolis, Roseland, attorneys).

David B. Rubin, for plaintiff-respondent (Rubin, Rubin, Malgran & Kuhn, Piscataway, attorneys).

PER CURIAM.

We affirm the judgment of the Appellate Division substantially for the reasons stated in its reported opinion below. 235 N.J.Super. 105, 561 A.2d 663 (1989). We modify the judgment to allow the court below to mold the pleadings to conform to the unique circumstances of this case. The case concerns the status of a purchaser of industrial property who agreed to buy the property during a window of time that began before the effective date of the Environmental Cleanup Responsibility Act (ECRA), N.J.S.A. 13:1K-6 to -13, but did not close title to the property until February 28, 1984, two months after the Act's effective date.

The facts of the transaction are fully set forth in the opinion of the Appellate Division. We therefore omit a detailed recital and make no reference to certain assignments and lease-back agreements or designations of parties that are not critical to the disposition. The property had housed an old pencil and crayon factory. The sale contract provided, among other things, that most equipment would be removed by the seller prior to closing except certain tanks, which were to be cleaned and left in a nonhazardous condition. The buyer proposed to convert the factory buildings into 400 units of apartment housing. When, after the title had passed, the buyer's construction mortgagee insisted on ECRA compliance as a condition of the construction loan, the buyer sought to recover from the seller the costs of ECRA compliance. Neither the contract of sale nor the title-closing documents adverted in any way to the satisfaction of ECRA's requirements, although the contract recited that plaintiff was aware of the property conditions and accepted the premises in those conditions subject to any subsurface conditions not disclosed by any instrument of record.

When negotiations were unsuccessful, the buyer sued the seller for the costs of the cleanup. The buyer sought a summary judgment on the basis that the seller had violated ECRA. The seller moved to dismiss the complaint. After some discussion of whether the complaint fairly pleaded other causes of action, the trial court held that ECRA did not afford the purchaser a cause of action against the seller except when the purchaser elects to rescind the sale. It further refused to permit the complaint to be amended to state any other claim. The Appellate Division reversed, holding that ECRA afforded the purchaser a private right of action for damages arising from the seller's failure to comply with the statute. Both viewpoints find arguable support in the Act and its interpretative development under the DEP. For example, defendant argues that the only private remedy specified in the Senate Committee Statement is voiding the sale or transfer. The Statement provides: "Violation of any of the provisions of the bill would constitute grounds for voiding the sale or transfer of the real property or business by the transferee * * *." Senate Energy and Environment Committee Statement, Assembly No. 1231. Plaintiff counters that the plain language of the statute establishes a private right of action. ECRA provides that "[f]ailure of the transferor to comply with any of the provisions of this act * * * entitles the transferee to recover damages from the transferor * * *." N.J.S.A. 13:1K-13a. In the circumstances of this case, however, an unqualified adoption of either the trial court resolution or the Appellate Division resolution would be problematic. Each polar position may produce an unjust result.

ECRA is quite unlike other environmental regimes in that it uses market forces to bring about the reversal of environmental pollution. It recognizes that some environmental conditions not posing an imminent hazard to air or water resources of the state may safely attend economic activities. Thus, ECRA does not impose an independent duty to clean up the property during a period of operation, although the owner cannot walk away from the scene after deciding to cease operations. But, absent provisions in the contract, in the event of sale, under ECRA the seller assumes the risks of compliance. Allowing a private right of action under ECRA would in that circumstance be consistent with the risk assumed by the seller. We thus endorse the reasoning and conclusion of the Appellate Division which held that a private right of action may be implied under ECRA.

The difficulty with...