Johnson Machinery Co., Inc. v. Manville Sales Corp.

• Decision Date: 15 May 1991
• Citation: 590 A.2d 1206,248 N.J.Super. 285
• Parties: JOHNSON MACHINERY COMPANY, INC., A New Jersey Corporation, Plaintiff-Appellant, v. MANVILLE SALES CORPORATION, A Delaware Corporation, Defendant-Respondent, and Ticor Title Insurance Company, A California Corporation, Defendant.
• Court: New Jersey Superior Court — Appellate Division

Page 285

248 N.J.Super. 285

590 A.2d 1206

JOHNSON MACHINERY COMPANY, INC., A New Jersey Corporation Plaintiff-Appellant, v. MANVILLE SALES CORPORATION, A Delaware Corporation Defendant-Respondent and Ticor Title Insurance Company, A California Corporation, Defendant.

Superior Court of New Jersey Appellate Division.

Argued Oct. 11, 1990.

Decided May 15, 1991.

William C. Slattery, for plaintiff-appellant (Norris, McLaughlin & Marcus, attorneys; William C. Slattery, of counsel and on the brief) Somerville.

Kenneth H. Mack, for defendant-respondent (Picco Mack Kennedy Jaffe Perrella & Yoskin, attorneys; Kenneth H. Mack, of counsel; Burton J. Jaffe, on the brief) Trenton.

Paul H. Schneider, Deputy Atty. Gen., for amicus curiae, N.J. Dept. of Environmental Protection (Robert J. Del Tufo, Atty. Gen., attorney; Michael R. Clancy, Asst. Atty. Gen., of counsel; Paul H. Schneider, on the brief).

Before Judges KING, LONG and STERN.

The opinion of the court was delivered by

LONG, J.A.D.

In June 1989, plaintiff Johnson Machinery Company (Johnson) instituted this action against defendants Manville Sales Corporation (Manville) and Ticor Title Insurance Company (Ticor) in the Superior Court, Chancery Division, to rescind a contract pursuant to which Manville had agreed to convey approximately 100 acres of land and improvements to Johnson; to obtain a return of the deposit of $2.2 million Johnson delivered to Ticor (the escrow agent) and for damages against Manville for fraud and negligent misrepresentation. Manville answered the amended complaint and counterclaimed for specific performance. The claims against Ticor were dismissed by consent.

In September 1989, Johnson moved for partial summary judgment pursuant to R. 4:46-2 on the fourth count of its amended complaint which alleged that it was entitled to void the contract because of Manville's noncompliance with the provisions of the Sanitary Landfill Facility Closure and Contingency Fund Act (Closure Act), N.J.S.A. 13:1E-100 to -116. Manville opposed the motion, claiming that the Closure Act does not apply to a sole source landfill (one which operates only as the depository of the waste its own commercial operation had generated) and that, in any event, genuine issues of material fact remained to be resolved, thus precluding summary judgment. The trial judge denied summary judgment on the grounds that the agreement was ambiguous as to the parties' intent and that a "quasi-factual" question remained as to "whether any portion of the site, admittedly designated by Manville as an inactive landfill, lies within the boundaries of the agreed-upon Sale Property." He also held that the "application of the Closure Act to the instant matter would not comport with the respective legislative intent, nor that Act's statutory scheme."

By leave granted, Johnson appeals claiming that the trial judge erred in denying summary judgment because the Closure Act applies to the contract property; the notice provisions of the Act ( N.J.S.A. 13:1E-116) were violated by Manville; and the violation entitled it to void the agreement.

At issue here is Section 116 of the Closure Act which provides:

a. No person shall contract to sell any land which has been utilized as a sanitary landfill facility at any time prior to the effective date of this supplementary act unless the contract of sale for the land shall state the fact and the period of time that the land was so utilized.

Any prospective purchaser of such land may obtain from the department, upon written request therefor, a history of the compliance by the facility with all applicable statutes, rules and regulations administered by the department.

b. Any contract made in violation of this section is voidable. ¹

We hold that the term "sanitary landfill facility" in the Closure Act includes a sole source landfill which operates only as the depository of the waste its own commercial operation has generated. We also hold that the Closure Act means exactly what it says: where sale property has been used as a sanitary landfill facility, the seller must include in the contract of sale a statement that the property has been so used and for what period of time. Failure to include this information will result in the contract being void at the sole discretion of the buyer. No equitable defenses to the voiding of the contract are recognized.

I

Manville is the owner of approximately 185 acres of real property and improvements located in the Borough of Manville Somerset County, New Jersey. The property was part of an asbestos-using manufacturing facility operated by Manville from about 1912 to 1985. In 1985, Manville announced its decision to cease manufacturing at the property. Because Manville was an "industrial establishment" within the meaning of N.J.S.A. 13:1K-8(f), the closing of the plant triggered its filing obligation under the New Jersey Environmental Cleanup Responsibility Act, N.J.S.A. 13:1K-6 to -13 (ECRA). The first of these filings was Manville's ECRA Site Evaluation Submission (SES) of September 9, 1985 which described the history of the manufacture, use, disposal, and handling of hazardous substances and wastes at the property. This filing, which indicated that there are approximately 2.1 million square feet of improvements on the land, included an appendix (Appendix 9) which described the location of hazardous substances on the property, and a map (# X-5320-2) which revealed an "inactive landfill" on several parts of the property. The landfill depicted on this map was, according to Manville, composed of "solid industrial wastes such as: lime, asbestos, asphalt roofing, transite pipe, etc." Appendix 10 to the SES described Manville's landfill operations:

A company-owned solid waste landfill, 198 acres in area, is located along Dukes Parkway, approximately one-half mile from the plant. The landfill has been used for the disposal of manufacturing waste from the plant since the early 50's....

....

Prior to the early 50's, manufacturing waste was deposited in landfill areas, now inactive, located in the northern section of the main plant site. This area is indicated on Print X-5320-2. [Emphasis added].

Appendix 15 to the SES which set forth Manville's plan for decontamination of its buildings and equipment stated:

As indicated on Print X-5320-2, a portion of the Manville Plant was used as an industrial landfill prior to the purchase of the land along Dukes Parkway, and its subsequent use for landfill purposes in the 1950's. The inactive landfill at the site of the plant contains asbestos and other materials which were used in production operations at that time. [Emphasis added].

The SES was signed and certified by Manville's Plant Engineer.

In July 1986, Manville filed a Sampling Plan with the New Jersey Department of Environmental Protection (DEP) as required by N.J.A.C. 7:26B-3.2(c) 11. The Sampling Plan was prepared by Manville's environmental consultant, Elson T. Killam Associates, Inc. (Killam) and provided:

Prior to the early 50's, manufacturing waste products were deposited in an on-site landfill area which is now inactive. This landfill was located in the northern section of the main plant site.

This landfill will not be considered at this point within the sampling plan. Data concerning the history and operation of the landfill as well as its composition and extent is currently being reviewed. It is anticipated that these data will be sufficient to adequately define the extent and describe the composition of the landfill. Upon completion of this review, the results (including a map of this area) will be submitted to the DEP--Bureau of Industrial Site Evaluation.

In early 1987, Johnson and Manville began negotiations toward an agreement whereby Johnson would purchase a substantial portion of the Manville property. Throughout the negotiations, a distinction was made between the portion of the property that Johnson would purchase (Sale Property) and the portion of the property that Manville would retain (Retained Property). Correspondence from Manville to Johnson indicated the basis for the distinction:

The property we have decided to sell is a portion of the Manville, New Jersey plant facility.... The site is approximately 100 acres with about 1.7 million square feet of buildings. It does not include the rear portion of the site which contains extensive tailing ponds and asbestos waste deposits or the river flood plain portion of the site for obvious reasons.

During negotiations, Manville provided Johnson with a copy of the ECRA map (# X-5230-2). However, omitted from this copy was the "inactive landfill" designation which appeared on the map filed with the DEP.

The parties executed the final agreement in October 1987. Section 1.01 of the agreement defined the portion of the property which Manville agreed to sell and Johnson agreed to purchase as follows:

1.01 Purchase of the Sale Property.

(a) Subject to the terms and conditions provided herein, at closing, as that term is defined below, Manville shall convey to Johnson good and marketable title to approximately one hundred (100) acres of real property with approximately 1.7 million square feet of improvements thereon located in Manville, New Jersey, which real property is generally depicted on the attached Exhibit A (the "Sale Property"). The precise boundaries of the Sale Property and the property to be retained by Manville and identified on Exhibit A as the "Retained Property" shall be established after Manville has determined (through soil sample tests, consultation with government representatives and other necessary or advisable steps) the extent to which said real property can be rehabilitated for future use pursuant to a program to be undertaken by Manville, as described in Section 5.02. In the event the Sale Property is determined to consist of less than 90 acres or more than 110 acres, the purchase price shall be adjusted at a rate of $100,000 per...