Judicial Estoppel Available When Defending New Jersey Spill Act Suits

Under the Equitable Doctrine of Judicial Estoppel, Parties are Precluded from Taking a Position in a Case that is Contrary to a Position it has Taken in Earlier Legal Proceedings

Under the equitable doctrine of judicial estoppel, parties are precluded from taking a position in a case that is contrary to a position it has taken in earlier legal proceedings. As explained by the Appellate Division in Cummings v. Bahr, 295 N.J. Super. 374, 387 (App. Div. 1996), “If a court has based a final decision, even in part, on a party’s assertion, that same party is thereafter precluded from asserting a contradictory position.”

In Terranova et al. v. General Electric Pension Trust et al., the Appellate Division of the New Jersey Superior Court held that the doctrine of judicial estoppel precluded the owners of a gas station from seeking contribution costs under the New Jersey Spill Compensation and Control Act (Spill Act) from certain defendants because the owners had already obtained a court order holding other parties responsible for the contamination at issue.

Allegations and Defenses Raised in Terranova

In Terranova, Matthew P. Terranova, Karen L. Terranova and New Land Holdings, LLC (“Plaintiffs”), owners of a commercial property long used as a gas station, alleged that former owner-operators General Electric Pension Trust and Atlantic Richfield Company, Amerco Real Estate Company, and Charles Boris, Jr., Carol Boris and Edward Wilgucki (collectively, the “Defendants”) were liable under the Spill Act for contribution toward the cost of clean-up and removal of hazardous substances.

However, Plaintiffs had previously leased the property to Keith Friedman and Michael Puccio, who operated a gas station there from 1981 until 2008. In May 2010, Plaintiffs amended an action filed against Puccio and Friedman related to an escrow agreement, adding claims alleging Puccio’s and Friedman’s environmental contamination of the property, including one for contribution under the Spill Act.  The case went to arbitration, and based on conclusions of Plaintiffs’ expert reports, Plaintiffs were awarded $45,000 for expended remediation costs in 2012.  Friedman and Puccio were also required to take over the remediation process.  Friedman and Puccio failed to fulfill this obligation. Plaintiffs subsequently conducted further studies at the site and concluded that “soil and groundwater contamination . . . associated with the gasoline storage and handling” began on the property “on or before 1963 and continued until… 2000.” On November 10, 2015, the plaintiffs filed the present action against the Defendants based on these new conclusions.  During discovery the Defendants became aware of Plaintiffs’ initial litigation against Puccio and Friedman and filed motions for summary judgment, citing judicial estoppel.  The court agreed, finding that judicial estoppel prohibits a party from maintaining conflicting positions at different points in litigation and barred Plaintiffs’ Spill Act claims. 

Appellate Division’s Decision

Plaintiffs appealed, but the Appellate Division affirmed the trial court’s grant of summary judgment to the Defendants.  “Judicial estoppel is a defense to Spill Act claims for contribution and its application was proper under the material circumstances of this case which we now review in the light most favorable to plaintiffs,” the panel held.

In reaching its decision, the appeals court rejected the Plaintiffs’ argument that judicial estoppel is not a recognized defense to Spill Act claims. “Adhering to the [Supreme] Court’s logic, judicial estoppel is not a defense subject to any overriding legislation and, as such, it may be maintained against a Spill Act claim,” the court wrote. “The doctrine is an equitable principle… designed to “prevent litigants from playing fast and loose with the courts,” the appeals court further explained, citing the Third Circuit’s decision in Ryan Operations v. Santiam-Midwest Lumber.

The court went on to conclude that that judicial estoppel precluded the Plaintiffs’ Spill Act claims. “The decision to disregard the possibility that other dischargers — from whom Plaintiffs now seek contribution — were responsible under the Spill Act and pursue only Puccio and Friedman is the type of inconsistent practice necessitating application of the judicial estoppel doctrine,” the appeals court held.

Key Takeaway for NJ Property Owners

The Appellate Division’s decision makes clear the need for contaminated property owners to identify all potentially responsible parties prior to pursuing any remediation claim under the New Jersey Spill Act. If not, they may be precluded for later seeking contribution from additional parties, even though they may have indeed been responsible for the contamination.

If you have any questions, please contact us

If you have any questions or if you would like to discuss the matter further, please contact me, Dan McKillop, or the Scarinci Hollenbeck attorney with whom you work, at 201-806-3364.