MUNTERS CORPORATION v. ENVIRO-SCIENCES
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SUPERIOR COURT OF NEW JERSEY
APPELLATE DIVISION
DOCKET NO. A-0942-16T1
MUNTERS CORPORATION, a New York
corporation, NICHOLAS DES CHAMPS
and REBECCA DES CHAMPS, in their
individual capacity and as indemnitors
on behalf of MUNTERS CORP.,
Plaintiffs-Appellants,
v.
ENVIRO-SCIENCES (OF DELAWARE)
INC., a Delaware corporation,
Defendant-Respondent.
______________________________________
Argued March 20, 2018 – Decided April 19, 2018
Before Judges Yannotti and Mawla.
On appeal from Superior Court of New Jersey,
Law Division, Essex County, Docket No. L-1931-
16.
Brian J. Molloy argued the cause for
appellants (Wilentz, Goldman & Spitzer, PA,
and Ronald C. Minkoff (Frankfurt Kurnit Klein
& Selz PC) of the New York bar, admitted pro
hac vice, attorneys; Brian J. Molly and Ronald
C. Minkoff, of counsel and on the brief; Risa
M. Chalfin, on the briefs).
Timothy E. Corriston argued the cause for
respondent (Connell Foley, LLP, attorneys;
Timothy E. Corriston, of counsel and on the
brief; Scott M. Press, on the brief).
PER CURIAM
Plaintiffs Munters Corporation and its indemnitors filed a
malpractice action against defendant Enviro-Sciences Inc.
Defendant moved to dismiss the complaint because it was barred by
the statute of limitations and therefore failed to state a claim.
The trial court dismissed plaintiffs' complaint with prejudice.
We affirm.
The following facts are taken from the record. From 1983 to
1990, plaintiffs1 operated a manufacturing facility in Livingston.
From 1991 to 1997, plaintiffs retained counsel to assist with the
wind-down of its New Jersey operations, including environmental
and regulatory matters, and sale of the property. In order to
sell the property, plaintiffs had to comply with certain
obligations under the New Jersey Industrial Site Recovery Act
(ISRA). Plaintiffs allege defendant was hired as plaintiffs'
environmental consultant to work in tandem with counsel on ISRA
compliance matters.
On December 30, 1996, upon the advice of defendant, plaintiffs
executed a negative declaration stating there was no discharge of
1
Nicholas and Rebecca Des Champs owned Des Champs Laboratories,
Inc., a former industrial manufacturer, which merged into Munters
Corporation in 2007.
2 A-0942-16T1
hazardous substances from the property, and on January 9, 1997,
defendant submitted the negative declaration to the New Jersey
Department of Environmental Protection (DEP) formally requesting
the issuance of a No Further Action (NFA) letter. The DEP approved
the request and issued an NFA letter on January 22, 1997, closing
its case related to ISRA compliance, and the property was
subsequently sold.
In 2008, the DEP rescinded the NFA letter after groundwater
contamination was discovered originating from the property. On
November 10, 2008, the DEP issued a letter stating: "Because the
[DEP] has rescinded the January 22, 1997 NFA approval [plaintiffs]
no longer ha[ve] the required authorization that allowed the sale
of property to occur in 1997." The rescission letter instructed
plaintiffs to complete an application for a remediation agreement
with the DEP, conduct an investigation of the property to define
the source of contamination, submit a preliminary assessment and
site investigation report, and pay the appropriate review fees.
After receiving the DEP's rescission letter, plaintiffs were
advised by legal counsel regarding a De Minimis Quantity Exception
("DQE"). According to plaintiffs' complaint, if defendant had
advised plaintiffs to obtain a DQE rather than the NFA Letter, the
DEP would have been barred from pursuing plaintiffs for the
3 A-0942-16T1
groundwater contamination discovered at a later date. Unlike an
NFA letter, a DQE could not be rescinded.
Thus, plaintiffs submitted a retroactive DQE application to
the DEP on March 23, 2009. The DEP denied plaintiffs' retroactive
DQE application on April 21, 2009, due to the presence of
groundwater contamination on the property.
On October 27, 2014, plaintiffs contacted defendant
requesting defendant execute a tolling agreement pertaining to
plaintiffs' potential malpractice claims against defendant. In a
letter, plaintiffs stated: "The time within which [plaintiffs] may
bring a claim for professional malpractice and breach of contract
against [defendant] under the applicable six-year statute of
limitation running from their discovery of the breach (November
10, 2008) may expire on November 10, 2014." Defendant agreed to
enter into the limited tolling agreement with plaintiffs, and
agreed any claims plaintiffs may have had against defendant that
had not expired as of the effective date of the agreement on
November 4, 2014, were tolled to October 1, 2015. The tolling
period was excluded from the calculation of the statute of
limitations for any claim brought after the tolling date. The
tolling agreement was not extended after it expired.
On March 17, 2016, plaintiffs filed a complaint against
defendant in this matter. Defendant filed its motion to dismiss.
4 A-0942-16T1
Defendant argued the complaint failed to state a claim upon
which relief could be granted because plaintiffs' potential
malpractice claim accrued on November 10, 2008. Defendant argued
while the discovery rule applied in professional malpractice
claims, plaintiffs' complaint was still untimely because it was
filed approximately five-and-a-half months after the expiration
of the statute of limitations, notwithstanding the benefit of the
tolling agreement.
In response, plaintiffs argued the statute of limitations
expired on March 18, 2016, six years after the DEP's April 21,
2009 denial of the retroactive DQE, plus the 332 days of the
tolling period that were tacked on to apply to claims filed after
the tolling date. Plaintiffs also argued the court was required
to conduct a Lopez2 hearing to determine the date upon which its
malpractice claim against defendant accrued.
The motion judge entered an order granting defendant's motion
to dismiss plaintiffs' complaint with prejudice. In her oral
decision, the judge found the cause of action accrued on March 23,
2009, and thus plaintiffs should have filed their complaint by
February 18, 2016, pursuant to the tolling agreement. The judge
dismissed plaintiff's complaint for failure to state a claim
2
Lopez v. Swyer,
62 N.J. 267 (1973).
5 A-0942-16T1
pursuant to Rule 4:6-2(e), because it was filed on March 17, 2016.
The judge also determined "plaintiffs have failed to meet their
burden of establishing a need for a Lopez [h]earing, as the
admissions pled in the plaintiff[s'] complaint provide the [c]ourt
with the facts necessary to dispose of their claims." This appeal
followed.
We begin by reciting our standard of review. Appellate review
of a trial court's ruling on a motion to dismiss is de novo.
Frederick v. Smith,
416 N.J. Super. 594, 597 (App. Div. 2010)
(citing Seidenberg v. Summit Bank,
348 N.J. Super. 243, 250 (App.
Div. 2002)). "A complaint should be dismissed for failure to
state a claim pursuant to Rule 4:6-2(e) only if 'the factual
allegations are palpably insufficient to support a claim upon
which relief can be granted.'" Ibid. (quoting Rieder v. State
Dep't of Transp.,
221 N.J. Super. 547, 552 (App. Div. 1987)).
"This standard requires that 'the pleading be searched in depth
and with liberality to determine whether a cause of action can be
gleaned even from an obscure statement.'" Ibid. (quoting
Seidenberg,
348 N.J. Super. at 250).
Plaintiffs contend because defendant failed to advise of the
need to apply for a DQE prior to the sale of the property, they
were thereafter barred from obtaining a DQE. Therefore, the date
of accrual for the action was April 21, 2009, the date when the
6 A-0942-16T1
DEP denied plaintiffs' application for a retroactive DQE.
Plaintiffs argue the statute of limitations and the additional 332
days pursuant to the tolling agreement, would run from April 21,
2009 and expire March 18, 2016. Thus, plaintiffs claim the March
17, 2016 complaint was timely.
N.J.S.A. 2A:14-1 states: "Every action at law for
[professional malpractice] . . . shall be commenced within [six]
years next after the cause of any such action shall have accrued."
"The traditional rule is that a cause of action accrues on the
date when 'the right to institute and maintain a suit', first
arises." Russo Farms v. Vineland Bd. of Educ.,
144 N.J. 84, 98
(1996) (quoting Rosenau v. City of New Brunswick,
51 N.J. 130, 137
(1968)).
"[P]ursuant to the discovery rule, a professional malpractice
claim accrues when: (1) the claimant suffers an injury or damages;
and (2) the claimant knows or should know that its injury is
attributable to the professional negligent advice." Vision Mortg.
Corp. v. Patricia J. Chiapperini, Inc.,
156 N.J. 580, 586 (1999)
(alteration in original) (quoting Circle Chevrolet Co. v.
Giordano, Halleran & Ciesla,
142 N.J. 280, 296 (1995)).
Thus, when a party is either unaware that he
has sustained an injury or, although aware
that an injury has occurred, he does not know
that it is, or may be, attributable to the
fault of another, the cause of action does not
7 A-0942-16T1
accrue until the discovery of the injury or
facts suggesting the fault of another person.
[Tevis v. Tevis,
79 N.J. 422, 432 (1979).]
"Fault" in the context of the discovery rule
is simply that it is possible -- not provable
or even probable -- that a third person's
conduct that caused the injury was itself
unreasonable or lacking in due care. In other
words, knowledge of fault does not mean
knowledge of a basis for legal liability or a
provable cause of action; knowledge of fault
denotes only facts suggesting the possibility
of wrongdoing. Thus, knowledge of fault for
purposes of the discovery rule has a
circumscribed meaning: it requires only the
awareness of facts that would alert a
reasonable person exercising ordinary
diligence that a third party's conduct may
have caused or contributed to the cause of the
injury and that conduct itself might possibly
have been unreasonable or lacking in due care.
[Savage v. Old Bridge-Sayreville Med. Grp.,
P.A.,
134 N.J. 241, 248 (1993).]
"Legally-cognizable damages occur when a plaintiff
detrimentally relies on . . . the negligent advice . . ." in the
context of professional malpractice. Grunwald v. Bronkesh,
131 N.J. 483, 495-96 (1993). "[A]lthough an adverse judgment may
increase a plaintiff's damages, it does not constitute an
indispensable element to the accrual of a cause of action." Ibid.
Here, the trial court correctly reasoned:
In accordance with [Rule] 4:6-2(e), and New
Jersey precedent, the Court finds that the
plaintiff's identified accrual date of April
21st, 2009 is not consistent with the
8 A-0942-16T1
recognized and designated ways a claim can
accrue.
Because the time a cause of action accrues is
the date at which the plaintiff both realized
that they were injured and "knew or should
have known." [This is] [b]asically an
objective standard that the injury could have
been caused by negligence, sufficient facts
to start the statute of limitations running.
[Savage,
134 N.J. at 249.]
The Court finds that the latest possible date
that the claim could have commenced, the
statute of limitations clock is March 23rd,
2009.
As set forth in plaintiff’s brief in
opposition of this motion, plaintiff states
that after receiving the letter from the DEP
on November 10th, 2008, rescinding the 1997
NFA letter for the [property], because
hazardous materials had supposedly been found
in ground water coming from the property,
[plaintiff] consulted with new counsel.
This new counsel informed [plaintiff] for the
first time about the availability of obtaining
a DQE from the DEP, as an alternative method
of complying with the ISRA.
Additionally, [plaintiff] was informed that
based on [defendant]'s prior report,
[plaintiff] would have been entitled to
receive a DQE back in 1997[,] and had it been
obtained, it would have barred the DEP from
attempting to hold plaintiffs liable for the
alleged new found contamination.
Thus, as stated in plaintiff’s opposition
brief, the receipt of the DEP letter on
November 10th, 2008, "was the first indication
that [plaintiff] might face liability for
remediation of the alleged pollution."
9 A-0942-16T
1 And by March 23rd, 2009, [plaintiff] filed an
application for a DQE. This is after
consulting with new counsel that [plaintiff]
learned about the availability of a DQE that
was available back in 1997[,] and had they
obtained it at that time, the DEP would have
been barred from attempting to hold plaintiff
liable in 2008.
This is what the DEP was attempting to do by
rescinding the NFA letter. Thus, by March
23rd, 2009, plaintiffs knew that one, the NFA
letter was revoked and they faced the risk of
cleanup if they were unable to obtain a DQE
and two, that had Enviro-Sciences attempted
to procure a DQE initially, instead of an NFA
letter, the entire issue would have been
avoided.
Thus, by March 23rd, 2009, plaintiffs were
"aware of facts that would alert a reasonable
person exercising ordinary diligence that
Enviro-Science’s conduct may have caused or
contributed to the cause of the injury and
that the conduct itself might possibly have
been unreasonable or lacking in due care."
[Savage,
134 N.J. at 248.] . . . .
. . . .
Therefore, based on the date of March 23rd,
2009, the plaintiffs must have filed the
complaint against ESI calculated with the
additional 332 days provided in the [t]olling
[a]greement by February 18th, 2016, in order
to . . . avoid violating the statute of
limitations.
Since plaintiff’s complaint was filed March
17th, 2016, it was not timely and consequently
is barred by the expiration of the statute of
limitations.
10 A-0942-16T1
Our review of the record does not lead us to a different
conclusion than the motion judge. By filing for a DQE on March
23, 2009, plaintiffs knew or should have known their cause of
action had accrued because they discovered defendant's conduct may
have caused injury in connection to the wind-down of their
business.3
Plaintiffs contend "[t]he [t]rial [c]ourt could not have made
an informed decision on the accrual date for the statute of
limitations, specifically the date of knowledge of fault, without
even reviewing the critical March letter or without conducting a
3
Plaintiffs' argument counsel's failure to advise them of a DQE
barred them from obtaining one, and therefore harmed them, has
been addressed while this appeal was pending. In R&K Assocs., LLC
v. N.J. Dep't of Envtl. Prot., __ N.J. Super. __, __ (App. Div.
2017) (slip op. at 11), we held "there is no language in the text
of the statute explicitly prohibiting a former owner of property
. . . from pursuing a DQE after it has sold its parcel." We
stated:
It would be inequitable to construe the
statutory scheme to deprive former owners of
contaminated sites, who can be held liable
retrospectively under ISRA for those
conditions, of the opportunity to pursue DQEs
or other exemptions that may be enjoyed by
current owners. If liability under ISRA can
extend to a former "owner" then the avenue for
an exemption equitably and logically should
extend reciprocally to qualified former
owners, as well.
[Id. at 16-17.]
11 A-0942-16T1
Lopez hearing to establish a factual record." Plaintiffs argue
the motion judge "improperly denied [p]laintiffs' request for a
hearing[.]" Lopez,
62 N.J. at 274.
A Lopez hearing is meant to provide an opportunity for the
"equitable claims of opposing parties [to] be identified,
evaluated and weighed" by the trial court before determining the
date upon which a plaintiff became aware of the facts giving rise
to the cause of action. Lopez,
62 N.J. at 275. "The burden of
proof will rest upon the party claiming the indulgence of the
rule." Id. at 276. "The proofs need not evoke a finding that
plaintiff knew for a certainty that the factual basis [for
defendant's liability] was present." Burd v. N.J. Tel. Co.,
76 N.J. 284, 293 (1978).
When the credibility of the plaintiff is a significant factor,
"[t]he determination by the judge should ordinarily be made at a
preliminary hearing . . . ." Lopez,
62 N.J. 267, 275 (1973).
However, "[w]here credibility is not involved, affidavits, with
or without depositions, may suffice; it is for the trial judge to
decide." Ibid. Where "the record . . . unquestionably establishes
[a] plaintiff's awareness of the essential facts, no formal hearing
[is] necessary to resolve the discovery rule issue." Lapka v.
Porter Hayden Co.,
162 N.J. 545, 558 (2000).
12 A-0942-16T1
Here, plaintiffs' complaint provided the motion judge with
the requisite information to determine the issue of plaintiffs'
awareness of the essential facts that should have alerted them to
the possibility of the claim by March 23, 2009. Indeed, the judge
concluded:
[B]ased upon the . . . facts in the pleadings
and Lopez v. Swyer,
62 N.J. 262 (1973), the
[c]ourt does not find that a Lopez [h]earing
is necessary as the plaintiffs have failed to
meet their burden of establishing a need for
a Lopez hearing, as the admissions pled in the
plaintiffs' complaint provide the [c]ourt with
the facts necessary to dispose of their
claims.
We agree. Plaintiffs' complaint contained admissions, which
the motion judge found established plaintiffs should have been
aware the date of accrual was March 23, 2009. A Lopez hearing was
not necessary to establish these facts. Furthermore, there is no
indication a hearing was required to address issues of credibility
as the motion before the judge was to dismiss for failure to state
a claim, and plaintiffs' pleadings were afforded all reasonable
inferences. Therefore, the motion judge properly determined
plaintiffs failed to meet the burden of establishing the need to
conduct a Lopez hearing.
Nonetheless, plaintiffs contend a hearing was mandated here
pursuant to Palisades at Fort Lee Condo. Assoc., Inc. v. 100 Old
Palisade, LLC,
230 N.J. 427 (2017). The plaintiff in Palisades,
13 A-0942-16T1
commenced a suit regarding defective construction of a
condominium. Id. at 434. The Palisades plaintiff was the new
owner of the condominium and did not have possession at the time
of construction. Id. at 449-50. The defendant argued the statute
of limitations had run and barred the plaintiff's construction-
related claims. Id. at 434, 455. The Court stated: "Based on
the record before us, we cannot [determine the accrual date]
because it requires findings of fact to determine when [plaintiff]
. . . first knew or . . . should have known of a cause of action
against . . . defendant. . . . To answer those questions, the
trial court must conduct a Lopez hearing . . . ." Id. at 452.
The Court held as follows:
In summary, the following principles guide
application of the property-tort statute of
limitations in construction-defect cases. The
date that a structure is deemed substantially
complete oftentimes is when a cause of action
accrues because some construction defects will
be readily apparent on inspection and
therefore the plaintiff will have a reasonable
basis for filing a claim. But many
construction defects will not be obvious
immediately. In such instances, a cause of
action does not accrue until the plaintiff
knows or, through the exercise of reasonable
diligence, should know of a cause of action
against an identifiable defendant. A
plaintiff who is a successor in ownership
takes the property with no greater rights than
an earlier owner. If the earlier owner knew
or should have known of a cause of action
against an identifiable defendant, the accrual
clock starts then.
14 A-0942-16T1
The determination of when a claim accrued
ordinarily should be made at a Lopez hearing.
At the hearing, the plaintiff will bear the
burden of proving that the claim accrued at a
time after a project's substantial completion.
See Lopez,
62 N.J. at 276. The plaintiff is
in the best position to establish when he
first knew or reasonably should have known of
his cause of action. The court's decision
must be based on objective evidence. The
court may consider documentary evidence,
deposition transcripts, and, in its
discretion, take testimony. Last, the court
must state its reasons for its findings of
facts.
[Palisades,
230 N.J. at 454 (citation
omitted).]
The facts and circumstances here are dissimilar from
Palisades. This case did not involve a latent construction defect
that was not readily discoverable by plaintiffs. Moreover,
plaintiffs did not inherit the conditions on their property from
a prior owner, such that the motion judge's imputation of knowledge
of the potential claims against defendant required a fact finding
hearing. The judge was able to determine the date upon which the
statute of limitations for the commencement of the lawsuit expired
based on the parties' pleadings.
Finally, plaintiffs contend the motion judge's decision the
statute of limitations commenced on March 23, 2009, was an argument
defendant asserted for the first time in its reply brief in support
of its motion to dismiss. Plaintiffs argue they were deprived of
15 A-0942-16T1
due process because it was improper for the motion judge to
consider an argument raised in a reply brief without affording
them the opportunity to respond. We are not persuaded.
In its reply brief to the motion judge, defendant reiterated
the accrual date was the November 10, 2008 rescindment. The
purpose of the reply brief was to reply to an argument plaintiffs
had advanced regarding the April 2009 denial and reiterate that,
based on their pleadings, plaintiffs were aware of the DQE option
by March 23, 2009, at the latest. Thus, defendant's reply brief
introduced no new facts or issues that plaintiffs had not already
raised themselves, and plaintiffs' due process rights were not
violated.
Affirmed.
16 A-0942-16T1
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