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Envitech, Inc. v. Joseph

A-57-97T2 (N.J. Super. App. Div. 1998) (Unpublished)

ENVIRONMENTAL LIABILITY; DRAFTING—Technical terms in contracts are given their technical meaning unless the context indicates otherwise and parole evidence may not be admitted to show an intention wholly unexpressed in the writing.

Two parties entered into a joint venture agreement to develop property owned by one of them. In the agreement, the property owner represented and warranted that the property was free of ” ... hazardous waste… .” The term “hazardous waste” was inserted into the agreement at the request of the party that did not own the property. Subsequent to the execution of the joint venture agreement, it was determined that the property had been contaminated by a fuel oil spill. The spill had been remediated by a prior tenant, but as a result of a dispute over this contamination of the property, development did not go forward. When an unpaid environmental consultant sued the two joint venturers, the non-owner joint venturer sued his fellow joint venturer, claiming that the indemnification provision required the property owner to make good on the promise that the land was free of “hazardous waste” (and also sued the joint venture’s attorney for malpractice).

Critically, the term “hazardous waste” was not defined in the joint venture agreement. The property owner and the attorney filed separate motions for summary judgment contending that there was no evidence offered that the property was subject to “hazardous waste” as that term is defined in the New Jersey Industrial Site Recovery Act. In response, the non-property owner alleged that his insistence that the indemnification be inserted was intended to guarantee that a cleanup of contamination would not be needed to develop the property. He stated that he did not intend to limit the interpretation of the term “hazardous waste” to a particular statutory definition or definition set forth in any administrative regulations. The lower court ruled in favor of the property owner and the attorney. In doing so, it relied heavily on two additional paragraphs of the agreement. One of those paragraphs was an integration clause making the written agreement the entire agreement between the parties and barring the introduction of parol evidence. The second provision was a declaration that the agreement would be subject to New Jersey law. Based upon those two provisions, the lower court opined that if the agreement was to be construed in accordance with New Jersey law, it was “apparent that the parties intended to define ‘hazardous waste’ consistent with the definition set forth in the New Jersey Industrial Site Recovery Act.” The claimant failed to submit an expert’s report concluding that the property contained “hazardous waste,” as so defined. In contrast, the property owner’s expert submitted a report that there was no such “hazardous waste” on the property. Upon appellate review, the decision of the lower court was upheld. The parol evidence rule excludes testimony which is offered for the purpose of varying or contradicting the terms of an integrated agreement. Even though the rule does not exclude evidence offered for the purpose of interpreting and giving meaning to the terms of the agreement, it may not be admitted to show an intention wholly unexpressed in the writing. Additionally, technical terms and words of art are given their technical meaning unless the context indicates otherwise. If the non-property owner intended that the term “hazardous waste” not be so limited, it was his obligation to either so provide in writing, or to produce evidence before the lower court. The mutual understanding of the parties was a different definition of “hazardous waste.”


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