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Estate of Ruggiero v. Department of Environmental Protection

OAL Docket No. ECA 4048-02 (Department of Environmental Protection 2003)

ENVIRONMENTAL LIABILITY—A property owner who purchases next to a land fill is not barred from pursuing a damage claim for property diminishment when the buyer, although aware of the landfill’s contamination, was not aware of how extreme it was.

Before her death, a woman bought a home adjacent to a landfill. After her death, her estate sold the property. After the decedent bought the home, but before her estate sold the home, the landfill was closed and was placed on the National Priorities List pursuant to the Comprehensive Environmental Response Compensation and Liability Act (CERCLA). Various governmental agencies spent a large amount of money to remediate contamination migrating from the landfill. About ten years before she died, the decedent filed a claim for property diminution with the Environmental Claims Administration (ECA). Diminution claims are not eligible for compensation unless the claimant has sold the property. Accordingly, the claim was not ripe until the estate sold the property. The ECA notified the estate that the claim was eligible and offered to pay $15,000. The estate challenged the basis for the claim and sought much more money. The ECA denied the claim and the matter was forwarded the Office of Administrative Law. Before a scheduled hearing took place, the ECA argued that the decedent “knew or should have known of the existence of the landfill when she purchased the subject property, that the [] Landfill was not improperly operated when decedent’s property was sold, and therefore the claim [was] not eligible for compensation, and that any diminishment in the value of the property [had] been offset by enhancement in value due to the extensive remediation of the landfill.” The Administrative Law Judge (ALJ) granted the ECA’s motion for summary decision and denied the claim in the entirety. The ALJ held that the claimant knew or should have known of the landfill, but also concluded that the claimant could not be charged with knowledge of the “extreme conditions,” as evidenced by listing the landfill as a Superfund site. The ALJ also found that at the time the property was sold, the landfill had been “‘properly closed and maintained,’ and therefore, any diminution in property value was not caused by the improper operation or closure of the sanitary landfill.” Lastly, the ALJ found that although the landfill diminished values of nearby properties before remediation, “since the subject property was sold after remediation, any damages the claimant may have incurred had been ameliorated by the proper closure of the facility.”

Extensive exceptions were filed in response to the ALJ’s decision. The estate “argued that summary decision was inappropriate since there were material facts in dispute,” including whether the decedent knew or should have known of the existence of the landfill. Further, the estate argued that the ALJ incorrectly found that the landfill had been closed. Lastly, the estate argued that the ECA should have been “equitably estopped from the denying [the] claim since it had previously determined that the claim was valid, and offered to settle it… .” The ECA responded that although the ALJ’s decision was correct, the ALJ’s holding that the landfill had been fully remediated was not factually correct. Nonetheless, it believed that the remediation already done at the landfill had greatly reduced the magnitude of any loss to the estate’s property.

The Commissioner of the Department of Environmental Protection overruled the ALJ. He believed that the ALJ had reached an incorrect finding based on the ALJ’s belief that the landfill had been fully remediated. He remanded the matter to the Office of Administrative Law for evidentiary hearing so that the ALJ could “re-evaluate the claim based on a correct understanding of the status of the remediation at [the] landfill.” The Commissioner also pointed out that the Sanitary Landfill Facility Closure and Contingency Fund Act “provides compensation for damages from the improper operation and closure of landfills.” The Fund “is strictly liable ‘for all direct and indirect damages, no matter by whom sustained, proximately resulting from the operations or closure of any sanitary landfill.” To the Commissioner, it was relevant “that the decedent could not have had knowledge of the extreme conditions at the [] landfill. ... [W]hile a claimant cannot be compensated for the property diminution that should have been anticipated due to purchasing property immediately adjacent to a large obvious landfill, [the administrative code provision relied upon by the ALJ was] not a bar to eligibility for compensation for damages that could not reasonably be anticipated.” Lastly, even though “the construction phase of the sanitary landfill remediation was completed before the estate sold the subject property, the groundwater remediation [was] not complete.” Consequently, the ALJ’s finding that compensation was precluded because the landfill had been remediated was factually incorrect.

Lastly, the Commissioner did not believe that the ECA should have been equitably estopped. “Estoppel is invoked rarely against a public entity, and only to prevent manifest injustice.” The ECA extended a settlement offer to the claimant. The claimant rejected that offer. “There was no misrepresentation. Claimant had no vested right to compensation from the Fund, and was specifically forewarned by the Fund” that if the claimant did not accept the offer, “ECA could raise objections to compensation in the context of the adjudicatory hearing.”

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