Innocent Purchasers May Still Be Liable Under the Spill Act

Previously Published in "New Jersey Law Journal" - July 15, 2013

In N.J. Schools Dev. Auth. v. Marcantuone, 428 N.J. Super. 546 (2012), certif. denied, 2013 N.J. Lexis 509 (2013), the Appellate Division ruled that a 2001 amendment to the New Jersey Spill Act had essentially nullified a long line of cases which had found that persons who (prior to 1993) had purchased already-contaminated land were not liable for cleanup costs under the Spill Act. What makes this ruling interesting is that the amendment in question, which the Marcantuone court found had wrought this change, only purported to create a defense to Spill Act liability and was not itself a liability clause.

In fact, the Appellate Division conceded its ruling was somewhat novel and noted that: "Although it may seem counterintuitive to infer liability from legislation establishing an affirmative defense, logic dictates that this is the case." 428 N.J. Super. at 549.

The Marcantuone Decision

In Marcantuone, a landowner had purchased property long before the amendment to the 1993 Spill Act that created an "innocent purchaser" defense for those buying property after the amendment's effective date, so long as a person performed due diligence and investigated a site before buying it for pre-existing contamination at the property. Following the reasoning of a line of cases stretching back to the initial adoption of the Spill Act in 1977, the trial court found that the property owner was not liable for the cleanup of the contamination found at the site, which contamination had been caused by discharges of a dry-cleaning chemical, which discharges had occurred prior to the time the owner took title in 1985.

The trial court found that the owner had not discharged the chemical so was not liable as a "discharger" under the Spill Act, and was not "in any way responsible" for the discharged chemicals, as it had not owned or operated the site when the discharges occurred and had not owned or controlled the discharged chemicals.

The Appellate Division reversed the trial court decision in light of a 2001 amendment to the Spill Act which had created a defense to Spill Act liability for pre-1993 purchasers of already contaminated land if they could demonstrate that they had undertaken "all appropriate inquiry on the previous ownership and uses of the property based upon generally accepted good and customary standards" at the time the person purchased the land. The Appellate Division found that...