Opinion
DOCKET NO. A-1452-13T4
03-23-2015
THOMAS NICOL ASPHALT COMPANY, and THOMAS NICOL COMPANY, INC., Plaintiffs-Respondents, v. DAVIES CONSULTANTS, INC., Defendant/Third Party Plaintiff-Appellant, v. NEW JERSEY DEPARTMENT OF ENVIRONMENTAL PROTECTION and ACTING ADMINISTRATOR, NEW JERSEY SPILL COMPENSATION FUND, Third Party Defendants-Respondents.
Chad N. Cagan argued the cause for appellant (Sonnenblick, Parker & Selvers, P.C., attorneys; Mr. Cagan, on the brief). Stephen B. Kotzas argued the cause for respondents Thomas Nicol Asphalt Company and Thomas Nicol Company, Inc. (Berry Sahradnik Kotzas & Benson, P.C., attorneys; Mathew B. Thompson, on the brief). Kimberly A. Hahn, Deputy Attorney General, argued the cause for respondents New Jersey Department of Environmental Protection and Acting Administrator, New Jersey Spill Compensation Fund (John J. Hoffman, Acting Attorney General, attorney; Melissa H. Raksa, Assistant Attorney General, of counsel; Ms. Hahn, on the brief).
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION Before Judges Sabatino, Guadagno, and Leone. On appeal from the Superior Court of New Jersey, Chancery Division, Ocean County, Docket No. F-12495-09. Chad N. Cagan argued the cause for appellant (Sonnenblick, Parker & Selvers, P.C., attorneys; Mr. Cagan, on the brief). Stephen B. Kotzas argued the cause for respondents Thomas Nicol Asphalt Company and Thomas Nicol Company, Inc. (Berry Sahradnik Kotzas & Benson, P.C., attorneys; Mathew B. Thompson, on the brief). Kimberly A. Hahn, Deputy Attorney General, argued the cause for respondents New Jersey Department of Environmental Protection and Acting Administrator, New Jersey Spill Compensation Fund (John J. Hoffman, Acting Attorney General, attorney; Melissa H. Raksa, Assistant Attorney General, of counsel; Ms. Hahn, on the brief). PER CURIAM
This appeal arises out of the cleanup of a forty-six-acre hazardous waste site in Manchester Township contaminated with coal tar and other substances from a prior asphalt manufacturing plant. The Department of Environmental Protection ("the DEP") and the New Jersey Spill Compensation Fund ("the Spill Fund") filed liens on the property in excess of $17 million to fund the cleanup.
In November 2000, plaintiff Thomas Nicol Asphalt Company ("Nicol"), then the owner of the site, entered into a contract to sell the property to appellant Davies Consultants, Inc. ("Davies") for $2 million. After the sale agreement was executed between Davies and Nicol, the DEP, the Spill Fund, and Davies entered into a Brownfield Prospective Purchase Agreement ("PPA"), which would entitle the DEP and the Spill Fund to receive $1 million of the $2 million sale price. Nicol was not a signatory to the PPA.
Due to a $10,000 offset, the sum was later reduced to $990,000, but we will round that number to $1,000,000 for ease of discussion.
At oral argument on appeal, the Deputy Attorney General representing the DEP and the Spill Fund advised us that the State agencies have generally discontinued the use of PPAs.
Paragraph 41 of the PPA specified that the DEP and the Spill Fund would allow Nicol to receive the other $1 million at closing to the extent that Nicol presented to the DEP sufficient proof that Nicol had incurred "legitimate business expenses" as owner of the property. Specifically, Paragraph 41 reads as follows:
Notwithstanding any other provision in this Agreement, including any Appendix to this Agreement, [the DEP] and the [Spill Fund] Administrator will not seek to recover any sums from the portion of the sale proceeds payable to [Nicol], to the extent [Nicol] use[s] such proceeds to satisfy [its] legitimate business expenses as of the effective date of this Agreement, and, further, that [Nicol] provide[s] documentation to [the DEP] and the [Spill Fund] Administrator establishing the legitimacy of these expenses to [the DEP] and the [Spill Fund] Administrator's satisfaction. If [Nicol] fail[s] to provide [the DEP] and the [Spill Fund] Administrator with such documentation at least sixty (60) days before [Nicol] and the Purchaser close title on the Nicol Property, [the DEP] and the [Spill Fund] Administrator reserve, and this Agreement is without prejudice to,
[the] DEP['s] and the [Spill Fund] Administrator's right to secure, pursue and recover any portion of the sale proceeds the Purchaser pays [Nicol] pursuant to the Agreement of Sale, a copy of which is attached to this Agreement as Appendix B.
[(Emphasis added).]
Davies was not mentioned in Paragraph 41, other than the two references to the "Purchaser" at closing. Davies essentially claims that it is a third-party beneficiary to that provision. The terms of the PPA are incorporated into the note and mortgage entered into between Davies and Nicol.
Davies contends that the requirements of Paragraph 41 need to be met before it pays the contract price. Although Nicol submitted various invoices to the DEP and the Spill Fund, the DEP and the Spill Fund rejected them as not being legitimate business expenses under Paragraph 41.
Apparently, Davies now has title to the property but the sales price has yet to be paid.
Nicol brought a foreclosure action in the Chancery Division to compel the sale. The trial court dismissed the foreclosure action as premature because the DEP had granted an extension. The payment of the sale price and distribution of the proceeds has been repeatedly delayed, in part because of ongoing efforts by New Jersey Natural Gas Company, which had contributed to the contamination, to conduct remedial activities on the site.
Davies's counsel represented to us at oral argument that the current target date for completion of the cleanup is September 2017.
Meanwhile, the DEP and the Spill Fund brought a separate cost recovery action against Nicol and its owners. In an effort to settle the cost recovery action, the DEP and the Spill Fund agreed to waive the right of the DEP and the Spill Fund to collect the other $1 million and the obligation of Nicol to prove legitimate business expenses in compliance with Paragraph 41 of the PPA.
The cost recovery action is captioned as DEP v. Johnson, Docket No. OCN-L-2576-02 (July 30, 2002).
Davies filed an application in aid of litigant's rights in the Chancery Division, arguing that the DEP and the Spill Fund had no right to unilaterally waive Paragraph 41 compliance by Nicol without Davies's consent. The trial court rejected that argument, and Davies now appeals from that ruling.
Among other things, Davies argues that the court abused its discretion in allowing the DEP and the Spill Fund to waive Paragraph 41 compliance; that the court essentially rewrote the PPA; and that the respective doctrines of res judicata, judicial estoppel, promissory estoppel, equitable estoppel, and unclean hands nullify the court's decision. The DEP, the Spill Fund, and Nicol have opposed the appeal.
Having fully considered the arguments raised by Davies in light of the record and the applicable law, we affirm the trial court's denial of its application in aid of litigant's rights. We do so substantially for the sound reasons expressed on the record by Judge Frank A. Buczynski, Jr. on October 11, 2013. We only add a few comments by way of amplification.
The DEP and the Spill Fund clearly had the joint authority under the PPA to waive unilaterally their right to receive at closing any portion of the other $1 million. The DEP and the Spill Fund also had the concomitant authority to waive Nicol's obligation under Paragraph 41 to prove legitimate business expenses to their satisfaction. The agencies' power to approve the expenses inherently subsumes the power to waive that right of approval. Likewise, the rights of the DEP and the Spill Fund to receive or disclaim the government's right to receive any of the other $1 million of the sale price is also exclusively reposed in those agencies, and such a waiver removes the reason for the review and approval of business expenses.
Contrary to Davies's arguments, Paragraph 41 does not change the $2 million total that Davies must pay for the property, but only affects to whom it pays a portion of that sum. Under the contract, PPA, note and mortgage, Davies must pay the first $1 million to the DEP, and Davies must pay the other $1 million to Nicol, but the DEP and the Spill Fund may seek some or all of that other $1 million under Paragraph 41.
Notably, Paragraph 41 does not state that Nicol had to prove the legitimacy of its claimed business expenses to the additional "satisfaction" of Davies as well as the government agencies. The PPA grants Davies no veto power over the agencies' decision. As Judge Buczynski aptly put it, "[t]he accounting was for the sole benefit of the State and was subject to its own satisfaction." Indeed, if, hypothetically, the DEP and the Spill Fund had approved the expenses tendered by Nicol, Davies would have had no basis under the PPA to interfere with that determination. We agree with Judge Buczynski that the relevant documents are "clear and unambiguous on their face," and that there was no need for an evidentiary hearing to consider parol evidence to ascertain the parties' contractual intent. See Conway v. 287 Corp. Ctr. Assocs., 187 N.J. 259, 268 (2006).
Davies argues that Paragraph 41 gives it a right to postpone paying the purchase price until after the date, if ever, when Nicol proves legitimate business expenses. However, nothing in Paragraph 41 dictates the postponement of payment. If Nicol fails to provide documentation of legitimate business expenses at least sixty days before the closing, Paragraph 41 merely states that the agencies reserve their right to seek any portion of the other $1 million. It does not state that the closing must be postponed until Nicol provides such documentation.
The DEP and the Spill Fund manifestly had the authority to act in the public interest and waive the State's rights under Paragraph 41 of the PPA in order to facilitate a resolution of the cost recovery action, one in which the public is expected to reap much larger monetary and other benefits. As the completion of both the cleanup and the turnover of the sale proceeds continued to be extended, it became clear to the State agencies that it was more advantageous to the public to waive Nicol's compliance with Paragraph 41 rather than have such compliance present a continued impediment to finality.
That said, we offer no advisory opinion about the merits of what counsel have represented us to be a tentative settlement of the cost recovery action. We defer any required judicial review of such a settlement to the Law Division judge presiding over that separate case.
--------
Given this context, the trial court did not err in denying relief to Davies in aid of litigant's rights. We review a trial court's ruling on a motion in aid of litigant's pursuant to an abuse of discretion standard. Saltzman v. Saltzman, 290 N.J. Super. 117, 125 (App. Div. 1996). The trial court's ruling should be reversed only if it "'(a) was not premised upon a consideration of all relevant factors, (b) was based upon a consideration of irrelevant or inappropriate factors, or (c) amount[s] to a clear error in judgment.'" Flagg v. Essex Cnty. Prosecutor, 171 N.J. 561, 571 (2002) (quoting State v. Baynes, 148 N.J. 434, 444 (1997)). We detect no such abuse of discretion here.
The balance of the various other arguments that Davies has raised on appeal lack sufficient merit to warrant discussion in this opinion. R. 2:11-3(1)(E).
Affirmed. I hereby certify that the foregoing is a true copy of the original on file in my office.
CLERK OF THE APPELLATE DIVISION