Enertron Industries, Inc. v. Mack

• Decision Date: 25 June 1990
• Citation: 242 N.J.Super. 83,576 A.2d 28
• Parties: ENERTRON INDUSTRIES, INC., and Frigid, Inc., Plaintiffs-Appellants, v. David C. MACK, Acting Administrator of the Department of Environmental Protection and Department of Environmental Protection, Defendants-Respondents.
• Court: New Jersey Superior Court — Appellate Division

Page 83

242 N.J.Super. 83

576 A.2d 28

ENERTRON INDUSTRIES, INC., and Frigid, Inc., Plaintiffs-Appellants, v. David C. MACK, Acting Administrator of the Department of Environmental Protection and Department of Environmental Protection, Defendants-Respondents.

Superior Court of New Jersey Appellate Division.

Argued Feb. 28, 1990.

Decided June 25, 1990.

Robert W. Beattie, Spring Lake, for plaintiffs-appellants (Weg and Myers, New York City, attorneys).

Stuart J. Lieberman, Deputy Atty. Gen., for defendants-respondents (Robert J. Del Tufo, Atty. Gen., attorney; Michael R. Clancy, Asst. Atty. Gen., of counsel).

Before Judges GAULKIN, DREIER and D'ANNUNZIO.

The opinion of the court was delivered by

GAULKIN, P.J.A.D.

Plaintiffs brought this action in lieu of prerogative writs to compel arbitration of their claims for compensation under the New Jersey Spill Compensation and Control Act, N.J.S.A. 58:10-23.11 et seq. See N.J.S.A. 58:10-23.11n. On the parties' cross-motions, the Law Division denied plaintiffs' application to compel arbitration and granted defendants' motion to dismiss the complaint. Plaintiffs appeal.

I.

The substantive question presented by the appeal is whether plaintiffs' claims are barred under N.J.S.A. 58:10-23.11k, which requires them to be filed "not later than one year after the date of discovery of damage."

Plaintiffs, manufacturers of electric heaters and fans, occupied leased space in a warehouse at 140 Thomas Street in Newark. On April 11, 1983 the warehouse was damaged by a fire originating in space occupied by another tenant, Vista Warehousing, Inc. By letter of June 9, 1983, the Newark Fire Department advised plaintiffs that "hazardous conditions" existed at the warehouse, including "dangerous chemicals which are stored ... on these premises ... [which] present a definite health and safety hazard due to [their] toxicity and flammability." The letter instructed plaintiffs that "[u]ntil this situation is abated no business should be conducted at this location."

According to plaintiffs, they "were denied meaningful access to the building from April 1983 to October 1984." During that 18-month period, they had access only to the ground floor. In September 1984, they authorized the Department of Environmental Protection (DEP) to enter the premises "for the purpose of securing samples to determine the presence of PCBs." By letter of October 18, 1984, counsel for DEP advised that plaintiffs would have to "be evacuated during the cleanup of the warehouse" and were allowed "approximately 2 weeks in which to make whatever arrangements are necessary to transfer your operations." Apparently plaintiffs vacated the premises shortly thereafter; on December 7, 1984 DEP denied plaintiffs' request to enter the warehouse "for the purpose of removing stored materials."

On December 10, 1984 plaintiffs filed their initial claim with the administrator of the Spill Compensation Fund. See N.J.S.A. 58:10-23.11i et seq. The claim identified Vista Warehousing, Inc. as the owner of "the potentially hazardous chemicals" and described "the causes of the damage or loss of income" as follows:

As a result of a fire on 11th April, 1983 certain potentially hazardous chemicals were found in the space occupied by Vista Warehousing, Inc., in the premises known as 140 Thomas St., Newark. Since that time, access to the premises have either been severely restricted or prohibited, by either the Fire Dept., or the DEP. Access is still prohibited, and the claimant continues to incur losses.

The claim asserted $1,500,000 in income losses, allocated as follows:

April-July 1983 $200,000

August-October 1983 $300,000

November 1983-January 1984 $300,000

January-March 1984 $200,000

April-July 1984 $200,000

August-October 1984 $300,000

The claim stated that those losses resulted because plaintiffs had "suffered continually from either restricted, or at times, prohibited entry into its premises." The restricted or prohibited access led to substantial reductions in plaintiffs' manufacture and sale of electric heaters in 1983 and 1984 and prevented them from bidding for additional orders.

On July 8, 1985 plaintiffs filed a second claim, which repeated "the causes of the damage or loss of income" as in the original claim but asserted additional losses after October 1984. Those losses included vandalism damage to machinery after "our forced evacuation" ($245,000), damages to inventory resulting from DEP's consolidation of inventory "with no amount of reasonable care" ($150,000), continuing loss of profits from December 1984 through April 1985 ($396,680) and losses "as a result of our inability to warehouse ... imported fans" between April and July 1985 ($300,000).

For more than 2 1/2 years after the filing of the second claim, defendants requested a variety of additional documentation in order to "evaluate" and "process" the claims. Plaintiff responded to those requests, but apparently not to defendants' satisfaction. Finally, on January 6, 1988, plaintiffs requested arbitration of their claim pursuant to N.J.S.A. 58:10-23.11n. By letter of February 19, 1989, defendants refused to proceed to arbitration until all the requested documentation was submitted and "until such time as the Major Fraud Unit of the New Jersey Department of Law and Public Safety, Division of Criminal Justice, Office of the Attorney General has completed an investigation it is currently conducting on this claim."

On April 4, 1988, plaintiffs filed this action to compel defendants to submit the dispute to arbitration. On plaintiffs' motion for summary judgment brought shortly thereafter, defendants responded that arbitration was not appropriate because the administrator "has not yet made a decision concerning the validity or amount of plaintiffs' damage claim." Accordingly, on November 1, 1988, the Law Division judge ordered defendants to "render a decision on the claim of the plaintiffs on the documentation as filed ... and notify plaintiffs of that decision.... [by] December 14, 1988."

In keeping with that order, defendants issued their Damage Claim Denial on December 14. After summarizing the two claims, the document set forth the following findings and conclusions:

3. The Spill Compensation and Control Act requires that claims against the Spill Fund be filed not later than one year from the date of discovery of damage [ N.J.S.A. 58:10-23.11k].

4. In its claim form, the Claimant indicates at Section 7 that the discharge that caused the alleged damages specified in Paragraph 2 above occurred at 140 Thomas Street, Newark, New Jersey, on April 11, 1983. At section 11C of the claim form the Claimant stated that it began to experience the subject damages in April of 1983.

5. According to information obtained by the Fund, the Claimant filed a claim with its insurance carrier, Aetna Insurance Company ("Aetna"), for damage incurred as a result of the discharge on November 30, 1983, and that negotiations with Aetna in connection with the claim began as early as May 26, 1983.

6. In various deposition and trial testimony, the officers of the Claimant have stated that they were aware of damage, specifically their inability to continue production at the facility due to the discharge, as early as one month after the discharge.

7. Accordingly, the instant claim was filed on December 10, 1984, more than one year after Claimant's discovery of damage.

NOW, THEREFORE:

8. Frigid Inc./Enertron Industries' claim (# 85-25) for compensation is hereby denied.

9. This decision constitutes final agency action.

10. The Spill Fund is denying this claim on the basis of the Statute of Limitations [ N.J.S.A. 58:10-23.11k]. The Fund is taking no position on whether the claimant suffered any damage or, if so, the amount of the damage.

Plaintiffs again moved for an order compelling arbitration; defendants cross-moved to dismiss the Law Division complaint. Following argument, the Law Division judge held that the December 14, 1988 decision was a "final administrative agency action" and plaintiffs' "recourse is an appeal to the Appellate Division." He denied plaintiffs' motion to compel arbitration and granted defendants' motion to dismiss "because [plaintiffs are] in the wrong place, now they should go to the Appellate Division based on the final administrative agency action." Plaintiffs appeal from the April 14, 1989 order memorializing that ruling.

II.

The Law Division judge erred in dismissing the complaint because plaintiffs were "in the wrong place." The prerogative writs action was properly filed in the Law Division, for it was in lieu of mandamus to compel agency action. Cf. Montclair Tp. v. Hughey, 222 N.J.Super. 441, 446-48, 537 A.2d 692 (App.Div.1987); Colon v. Tedesco, 125 N.J.Super. 446, 450-52, 311 A.2d 393 (Law Div.1973). Once defendants issued what they characterized as their "final agency action" on December 14, 1988, the litigation ought to have been transferred to the Appellate Division. R. 1:13-4; Atlantic City Mun. Utilities Authority v. Hunt, 210 N.J.Super. 76, 84, 509 A.2d 225 (App.Div.1986). We shall accordingly treat the matter as though it had been transferred to us rather than dismissed. Id.

III.

We find that the timeliness of plaintiffs' claims cannot be determined on the present record. To be sure, plaintiffs knew of the fire on or shortly after April 11, 1983. They also knew from the June 9, 1983 Newark Fire Department letter that "dangerous chemicals" were on the premises and that their business operations therefore had to be curtailed. Moreover, plaintiffs claimed that their losses began in April 1983 and had already mounted to $500,000 by October 1983. But those facts alone do not require the conclusion that plaintiffs' initial claim, filed December 10, 1984, came more than "one year after the date of discovery of damage" within the meaning of N.J.S.A. 58:10-23.11k.

Neither the legislative history nor any reported cases discuss the meaning of ...