In the latest installment of a long-running lawsuit filed by a group of NJ homeowners, a federal district court held that homebuilder who had removed, stockpiled, and re-spread soil contaminated with pesticides from a former orchard was a PRP because these actions constituted "disposal" under CERCLA. However, the court found that the Plaintiffs had not incurred response costs because the fees generated by its consultants reviewing the workplans proposed by Woodmont were in support of litigation. Thus, the plaintiffs failed to satisfy the last element necessary to create CERCLA liability.
In Bonnieview Homeowners vs. Woodmont Builders, et al, the plaintiff sought damages from the developer and the township where the homes were located under a variety of common law such as negligence and misrepresentation, breach of contract, and statutory grounds including CERCLA, RCRA and the NJ Spill Act. Two consultants who had performed phase 1 reports for the municipality had also been brought into the lawsuit but were dismissed from the case in earlier proceedings.
This particular decision granted and denied relief on a number of motions brought by the parties. The numerous issues that were resolved are too long to address in a single post. However, this case has plenty of lessons for those who develop farmland.
Following are the undisputed facts of the case. You be the judge.
The property was used a fruit orchard from 1941 until it was abandoned some time prior to 1970. when it was purchased by a group of individuals who knew it had been previously used as an apple orchard. The orchard operations included storing fertilizer and pesticides for spraying and applying onto the trees in the orchard. The chemicals were stored in drums and other containers at the site.
During the 1970s and 1980s, a portion of the Property was used for foresting. In 1997, Woodmont Builders entered into an agreement with the owners to develop the site for the construction of single family dwellings houses, with the proceeds of the sale of which would be shared by the parties to the agreement.
In April 1998, the Montville Department of Planning & Development retained an environmental consultant (who was later named as a defendant but eventually dismissed from the lawsuit) to perform a Phase 1. The ESA stated that historical photos showed that eastern portion of the site contained rows of trees, indicating that the area may have been a tree nursery. It also identified assorted debris including tires, wood and metal debris, cement, household debris, abandoned vehicles, hot water heaters, refrigerators, and empty aboveground storage tanks and drums. The report concluded that none of the observed debris was considered hazardous but recommended when the debris was removed, the lower layers should be carefully examined.
In September 1998, the Montville Township Planning Board approved an application to construct a residential subdivision on a 30-acre portion of the Property.
In February 1999, Montville acquired an approximately 100-acre portion of the Property for use as "open space" (the "Open Space Parcel").
In May 1999, Montville then engaged another consultant (and former defendant) that did not mention any discharge of pesticide constituents or other contaminants onto the soil and did not recommend any action with respect to the alleged contaminants.
In June 2000, Woodmont acquired the remaining 30-acre portion of the Property (the "Residential Lots"). Woodmont did not perform its own Phase 1 but instead relied on the 1998 report prepared for the township and the fact that Montville's Board of Health reviewed the lots in connection with the proposed residential development.
Woodmont then removed the surface debris from the Residential Lots, removed stockpiled the soils, and then commenced construction. After the foundations for the homes were dug, and the houses erected, Woodmont took the topsoil from the stockpile and returned it to the Residential Lots to become the lawns.
The plaintiffs purchased their homes from January 2001 and October 2002. Prior to purchasing their homes, the Individual Plaintiffs had title searches performed by title insurance companies. The title reports did not mention any possibility of pesticide contamination on the Residential Lots. Advertisements published on behalf of Woodmont Properties and Associated Sales represented that the homes were built on "natural homesites" and were a "great place to raise children”. Several prospective homeowners said they were told by sales associates that the topsoil at the Residential Lots was replaced with "good soil" or "fresh topsoil.
On July 26, 2001, Montville entered into an agreement with the NJDEP to investigate and remediate the Open Space Parcel.
In March 2002, Montville retained yet another environmental consultant to conduct soil sampling on the Open Space Parcel. The August 2002 identified three Areas of Concern ("AOCs") where pesticides and other contaminants were present in concentrations that exceeded the Residential Direct Contact Soil Cleanup Criteria ("RDCSCC") of the New Jersey Department of Environmental Protection ("NJDEP"). In a letter to the township, the consultant wrote “the 25-lot residential subdivision under construction from which the open space was originally subdivided from may also have been part of the same orchard and may contain constituents elevated above the RDCSCC. The majority of constituents elevated above the RDCSCC are metals and pesticides associated with historic orchard and land use.” The consultant indicated that contaminants did not present an imminent health hazard to the public because they were not very mobile, the soil was stable and exposure was limited, and that the principal health issue would be long-term ingestion of contaminated soils or long-term inhalation of dust originating from the soils. As a result, the consultant recommended applying and obtaining a Letter of No Further Action (NFA) from the NJDEP. The consultant also suggested that the Township Board of Health involvement might be warranted time to advise the public regarding contaminated soils at the site and the adjacent subdivision. The firm also suggested that until the NJDEP issued a NFA letter, a Public Notice advising of potential hazards at the site might be warranted to limit public contact with the soils of the site.
In April 2003, Montville notified the homeowners on Bonnieview Lane that it had discovered *** and levels of insecticides on the Open Space Parcel.
In May 2003, Montville requested permission to test the Individual Plaintiffs' properties for environmental contaminants because the their properties would have been part of the contiguous land formerly operated by Bonnieview Farms. After the sampling was completed, Montville advised the homeowners that the sampling revealed the presence of ***, dieldrin, lead, or DDT and that the results had reported the results to the NJDEP.
The lawsuit was filed in September 2003. Woodmont subsequently entered into a memorandum of agreement with NJDEP to investigate and remediate the contamination
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