Daily Development for
Friday, May 24, 1996

by: Patrick A. Randolph, Jr.
Professor of Law
UMKC School of Law

HAZARDOUS SUBSTANCES; STATE LAW; RIGHTS OF LANDOWNERS: Donee of contaminated property has no greater right to recover for costs of cleaning up hazardous waste contamination from state environmental cleanup fund than did her donor. Marsh v. New Jersey Spill Compensation Fund and Environmental Claims Administration, 670 A.2d 67 (N.J. Super. A.D. 1996).

The New Jersey Spill Compensation and Control Act, N.J.S.A. 58:10-23.11 et seq., created the New Jersey Spill Compensation Fund, N.J.S.A. 58:10-23.11i. The Fund is "strictly liable, without regard to fault, for all cleanup and removal costs and for all direct and indirect damages no matter by whom sustained" resulting from any prohibited "discharge" of a hazardous substance. N.J.S.A. 58:10-23.11g(a). However, if the person who has incurred the cleanup or removal costs, or who has sustained the damages "has discharged a hazardous substance, or is in any way responsible for any hazardous substance," that person is ""strictly liable, jointly and severally, without regard to fault, for all cleanup and removal costs no matter by whom incurred," N.J.S.A. 58:10-23.11g(c)(1), and is not entitled to reimbursement from the Fund, N.J.A.C. 7:1J-2.7.

Claimant acquired the property by deed of gift from her mother in 1991. Claimants' parents, and their predecessor in title, had leased the property for a service station from 1930 until 1974. Claimant knew before accepting the gift that her parents had leased the land for this purpose. She only learned that the land contained underground gasoline storage tanks and was contaminated by gasoline from those tanks after accepting the gift. The court reasoned that acquisition of land after hazardous substances have been discharged on it may not be sufficient to make one "responsible" for removal or remediation of those substances, State Dept. of Envt'l. Protection v. Arky's Auto Sales, 539 A.2d 1280 (N. J. Superior Ct. A.D.1988). Ownership and control at the time of the discharge, however, does impose responsibility. The court denied the claimant's request for compensation on equitable grounds not expressly contained in the Act:

". . . [W]e hold that [plaintif] is ineligible for cleanup costs. . . . On the basis of the stipulated facts, [claimant's mother] clearly is a responsible party, liable for cleanup costs because she knew or should have known of the leaking tanks on her property long before she gave the land to [claimant], and she failed to stop the leaks or remove the contamination. We will not interpret the Spill Act to permit a property owner who has profited by contaminating or permitting the contamination of property to obtain public financing for cleaning up the pollution by the expedient of making a gift of the property to her daughter or other close family member. . . . Consequently, we hold that a donee's right to recover reimbursement from the Spill Fund is no greater than her donor would be entitled to. Any other result would be inequitable and inconsistent with the purpose of the Spill Act."

Comment: As with many issues of moment decided on "equitable" grounds, we are left with many unanswered questions:

1. What if the owner/donee was responsible for clean-up costs either under state law or through suits brought by third parties? Indeed she might be liable if the stuff on her land migrates at some later time. Would she still be denied a claim here?

2. Did it matter that donee knew prior to the gift that the property had been used for gasoline station purposes?

3. Did it matter that the donee was the daughter of the donor and not Stevens Institute of Technology or some other charitable beneficiary?

4. Did it matter that the daughter was the direct grantee of a party who had responsibility for the conditions in question? What if the daughter in turn donated the land to another? What if the daughter sold the property to another? If the purchaser the purchaser could qualify for state clean-up, and knew it at the time of sale, it would pay a price based upon the "clean" value of the property. Wouldn't this in effect carry out the mother's wishes of giving the daughter the value of a site that qualified for state clean-up - contrary to the court's wishes? If the purchaser did not qualify, then aren't we unduly penalizing those who pay fair value for property based upon the origins of the title?

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