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Hawthorne Realty Company v. Hawthorne Prints, Inc.

A-4933-98T5 (N.J. Super. App. Div. 2001) (Unpublished)

ENVIRONMENTAL LIABILITY—The mere fact that a tenant used a particular chemical found to be a pollutant at its leased property is not sufficient to make that tenant liable to its landlord where the landlord cannot prove that the tenant, and not prior occupants, was the actual source of the pollution.

The owner of a commercial property sued a former tenant and other unknown parties for the costs of investigation and remediation of subsurface hazardous waste contamination at the property. The tenant operated a printing facility at the property for approximately 6 years. Based on the testimony of a representative of a chemical supplier to the tenant, the tenant used a variety of hazardous substances including various solvents and isophorone. The tenant also maintained a 4,000 gallon underground storage tank to hold “clean” solvent and a 1,000 gallon underground storage tank to hold “dirty” solvent. Several years after the tenant had vacated the property, the tenant agreed to remove the underground storage tanks. Based on the tank removal documentation, the tank contents included xylene, MEK, MIEK, toluene, cyclohexanone, and unidentified pigments. Several years later, the owner conducted an ECRA (now ISRA) investigation in connection with a proposed sale of the property. During the investigation, a NJDEP inspector identified a pipe exiting from the tenant’s former premises into the ground. Accordingly, the NJDEP required the collection and analysis of soil samples surrounding the pipe. The samples were contaminated and the NJDEP ordered the excavation of contaminated soil in that area. During the excavation activities, a large deposit of gelatinous paint-like substance, referred to by eyewitnesses as “white goop,” was observed fanning out from the end of the buried pipe. An analysis of the “white goop” revealed that it contained isophorone. To recover the costs incurred by the owner in investigating and remediating the contamination, the owner sued the tenant asserting both common law and statutory claims pursuant to the Spill Compensation and Control Act, the Water Pollution Act, and the Environmental Rights Act. The tenant denied all of these claims and prevailed at trial. The owner appealed, asserting that the lower court failed to consider the evidence and failed to impose strict liability on tenant. The Appellate Division declined to exercise original jurisdiction by reviewing the evidence de novo because it was not convinced that the conclusions of the lower court judge were “so manifestly unsupported by or inconsistent with the competent, relevant and reasonably credible evidence as to offend the interests of justice.” The Appellate Division recognized that the lower court considered evidence of the alleged timing of the discharge, the cause of the discharge, and the lifespan of isophorone. The lower court acknowledged that the owner proved that isophorone was found in the ground and that the tenant used isophorone in its process. However, the lower court concluded that the owner failed to prove that the isophorone identified in the ground belonged to the tenant. The fact that other tenants in the building over the years may have used isophorone in their process was enough for the Court to not impose liability on the tenant.

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