Search Icon
​NJDEP Takes a Further Step in Regulating Emerging Contaminants Banner Image

​NJDEP Takes a Further Step in Regulating Emerging Contaminants

Month: January 2018

​NJDEP Takes a Further Step in Regulating Emerging Contaminants

Posted on by rd_admin

In November 2017, the New Jersey Department of Environmental Protection (“NJDEP”) set the lowest limits in the country for perfluorooctanoic acid (“PFOA”) and perfluorononanoic acid (“PFNA”) in drinking water (See our November 8, 2017 Blog Article – NJDEP to Adopt Strict Standards for PFOA and PFNA in Drinking Water).  Now, by rule adoption published in the January 16, 2018 New Jersey Register, NJDEP took a further step in regulating these emerging contaminants by adopting a regulation that adds PFNA to the List of Hazardous Substances under the New Jersey Spill Compensation and Control Act (the “Spill Act”).  Adding PFNA to the Hazardous Substance List not only confirms that parties may face strict liability for cleanup and removal costs resulting from any discharge of PFNA to the environment, but also provides a mechanism for compensating individual property owners whose wells may be contaminated with this substance.  The rule also adopts a permanent specific Ground Water Quality Standard (“GWQS”) for PFNA of 10 parts per trillion as well as permanent specific GWQS for 22 other constituents.       

PFNA, historically used primarily as a processing aid in emulsion processes, is a developmental toxicant, liver toxicant, and immune system toxicant that bioaccumulates in humans.  It is extremely persistent in the environment and is highly soluble and mobile in water. 

The Department stated that it amended the Hazardous Substance List because PFNA groundwater contamination “is anticipated to continue in the foreseeable future due to its persistence as well as formation from precursor compounds in the environment.”  As part of its justification, the Department referred to an extensive area of PFNA groundwater contamination affecting 20 public water supply wells and 91 private potable wells in three southwestern New Jersey counties where NJDEP has borne the entire burden and cost of investigating the contamination and providing potable water to affected businesses and residences.  Now that PFNA is on the Spill Act Hazardous Substances List, major facilities that handle PFNA will be subject to all discharge and prevention and control requirements of the Spill Act.  Further, Spill Act funding for PFNA remediation as well as payment of damage claims resulting from PFNA discharges is also now available.  Significantly, its listing confirms that persons with Spill Act liability are affirmatively required to remediate discharges of PFNA. 

Remediating parties should keep informed of NJDEP’s efforts to regulate contaminants of emerging concern.  Even if not included on the Hazardous Substances List, NJDEP has stated that contaminants of emerging concern must be remediated if discharged to the environment.  Given the prevalence and persistence of many of these chemicals in the environment and the extremely low concentrations to which they may have to be remediated, addressing these emerging contaminants may change the approach to any site remediation case where they are present. 

For more information, please contact the author Alexa Richman-La Londe at alalonde@riker.com or any attorney in our Environmental Practice Group.

​Oklahoma Federal Court Holds Restrictive Covenants on Property Did Not Render It Unmarketable but May Be Covered Encumbrances Under the Title Policy

Posted on by rd_admin

The United States District Court for the Western District of Oklahoma recently held that use restrictions on a property did not render the property unmarketable, but nonetheless may be encumbrances that the title insurance policy at issue insured against.  See Chesapeake Land Dev. Co. LLC v. Chicago Title Ins. Co., 2017 WL 5930295 (W.D. Okla. Nov. 30, 2017).  In the case, the plaintiff insured purchased two lots in 2007.  Before purchasing, plaintiff learned that each lot was burdened with a use restriction:  one limiting its use to church purposes, and the other requiring it be used as a park.  Plaintiff insisted that these restrictions be removed, and the title agent allegedly represented that it would obtain releases that would remove these restrictions at the closing.  Similarly, plaintiff allegedly asked whether the city had an easement encumbering the property, and the title agent again allegedly stated that any easement would be eliminated through a release at the closing.  In 2014, plaintiff attempted to sell the property, but the potential purchaser discovered that the use restrictions still burdened the property.  Although plaintiff submitted a claim to the defendant title insurance company, it alleged that defendant delayed in responding and the potential sale was cancelled.  Around this time, plaintiff also discovered that the city’s easement likely still encumbered the property and had not been released.  Plaintiff then brought this action alleging breach of contract, among other things, and defendant filed a motion to dismiss.

The Court granted the motion in part and denied it in part.  First, it agreed with defendant that the use restrictions did not render the property unmarketable under the title policy.  “The two restrictive covenants at issue may affect the manner in which the parcels can be used and their economic marketability, but they do not necessarily impact title to the property.”  Nonetheless, the Court held that these restrictions were encumbrances on the property that may be covered by the policy and, as such, plaintiff had sufficiently plead a breach of contract claim regarding the restrictions.  Second, the Court held that plaintiff’s breach of contract claim regarding the easement should be dismissed.  Although the Court acknowledged that plaintiff had plead the existence of the easement on the property, it found that plaintiff did not allege that it had been damaged because of this easement.  Plaintiff’s allegation that “it is also unlikely that the City will voluntarily cede its implied easement rights without significant compensation for the same” was insufficient to survive the motion because plaintiff had not suffered any actual loss as a result of the easement.

For a copy of the decision, please contact Michael O’Donnell at modonnell@riker.com or Clarissa Gomez at cgomez@riker.com.

Ninth Circuit Holds That Loan Servicer Did Not Establish Diversity Jurisdiction in Borrowers’ Action to Temporarily Enjoin Foreclosure Because Amount in Controversy Did Not Exceed $75,000

Posted on by rd_admin

The United States Court of Appeals for the Ninth Circuit recently reversed a district court’s decision and held that the amount in controversy in a borrowers’ action to temporarily stay a foreclosure during the pendency of the borrowers’ loan modification application did not exceed $75,000 and accordingly, that diversity jurisdiction did not exist.  See Corral v. Select Portfolio Servicing, Inc., 878 F.3d 770 (9th Cir. 2017).  In the action, the borrowers defaulted on their loan and the loan servicer sent a notice of default and a notice of trustee sale.  The borrowers, who had a loan modification application pending, then filed an action against the servicer and obtained a temporary restraining order of the trustee sale.  The parties subsequently settled that action, with the servicer agreeing to give the borrowers 30 days to submit another application for a loan modification.  Two months later, the servicer scheduled another trustee sale for the property, and the borrowers brought this action seeking another temporary restraining order enjoining the sale of the property.  The state court granted the temporary restraining order but later denied the borrowers’ motion for a preliminary injunction.  The servicer removed the action to federal court, alleging that the parties were citizens of different states and that the amount in controversy exceeded $75,000 because the property secured a $680,000 note on which over $800,000 was due and owing.  The district court denied the borrowers’ motion to remand, concluding diversity jurisdiction existed.

On appeal, the Ninth Circuit reversed.  The Court first noted that the servicer had the burden to prove, by a preponderance of the evidence, that the benefit to the borrowers or the cost to the servicer would exceed $75,000 for this action.  In this case, the Court held that the only cost to the servicer would be the cost of reviewing the application and of delaying the foreclosure during its review, which “would be primarily in [the servicer’s] control[.]”  Further, the only benefit to the borrowers from the stay “would be derived from temporarily retaining possession of the Property” during the review.  The Court distinguished this matter from others in which borrowers sought to enjoin foreclosures indefinitely as part of a quiet title action or otherwise rescind their loan documents, because in those cases the amount in controversy would be the amount of indebtedness or value of the property.  The Court also added that other lenders or servicers could establish diversity in similar situations if the amount in controversy requirement is satisfied using other measures, “such as the transactional costs to the lender of delaying foreclosure or a fair rental value of the property during the pendency of the injunction.”  Nonetheless, the Court held that the servicer in this matter did not establish that its costs or the borrowers’ benefits from the temporary delay would exceed $75,000.  Finally, one justice dissented from this opinion, holding that the “long-established general rule” is that the matter in controversy is the value of the property because the ultimate goal of the servicer in such a case is obtaining title.

For a copy of the decision, please contact Michael O’Donnell at modonnell@riker.com or Clarissa Gomez at cgomez@riker.com.

Louisiana Appellate Court Holds Title Insurance Policy Insures Against Judgments Against Insured’s Prior Co-Owner

Posted on by rd_admin

The Court of Appeal of Louisiana, Third Circuit, recently reversed the judgment of the trial court and held that a title insurance policy insured against the judgments of the plaintiff’s co-owner that attached to the property when plaintiff and the co-owner purchased the property.  See DeGueyter v. First American Title Co., 230 So.3d 3562 (La. App. 2017).  On August 1, 2014, plaintiff and her brother-in-law purchased a one hundred percent undivided interest in a property, and the conveyance was recorded on September 3, 2014 at 4:09 pm.  In connection with the sale, plaintiff and her brother-in-law purchased a title insurance policy from defendant title insurance company, which stated that the policy was in effect as of “09/03/2014 @ 04:09 p.m. or the date of recording, whichever is later.” On September 2, 2014, however, the brother-in-law transferred his entire undivided interest to plaintiff, and this conveyance also was recorded on September 3, 2014 at 4:09 pm.  The next year, when applying for a mortgage, plaintiff discovered ten judgments and tax liens against the brother-in-law that had attached to the property upon their purchase.  Plaintiff made a claim with defendant, but defendant denied the claim.  Plaintiff then filed this action and the parties cross-moved for summary judgment.  The trial court denied plaintiff’s motion and granted defendant’s, holding that plaintiff “has clear and unencumbered title on her undivided one-half interest in the . . . property[.]”  On appeal, the appellate court reversed.

First, the Court held that the judgments and other liens preexisted the purchase of the property and automatically attached on the date of purchase, and thus were attached to the property as of the date defendant issued the policy.  Second, the Court held that these encumbrances rendered plaintiff’s title unmarketable and was an insurable risk under the language of the policy.  Third, the Court found that defendant’s argument that plaintiff had clear and unencumbered title on her undivided one-half interest in the property “ignores the stark reality that third parties possess outstanding rights of a ‘substantial nature against the property,’ which effectively renders title in the property unmarketable.”  Finally, the Court held that there was nothing in the record to indicate plaintiff was aware of these liens, and therefore they were not “created, suffered, assumed, or agreed to by [her].”  Thus, the Court held that plaintiff was entitled to summary judgment and reversed the trial court.

For a copy of the decision, please contact Michael O’Donnell at modonnell@riker.com or Dylan Goetsch at dgoetsch@riker.com.

Utah Federal Court Holds That Title Insurance Company Was Not Required to Tender Payment to Its Insured Within 30 Days of Accepting a Claim

Posted on by rd_admin

The United States District Court for the District of Utah recently granted a title insurance company’s motion for summary judgment in part, holding it was not required to tender a payment within 30 days of accepting its insured’s claim, and denied the motion in part because there were issues of fact as to the proper date of loss under an owner’s policy.  See Marcantel v. Stewart Title Guar. Co., 2017 WL 5991734 (D. Utah Dec. 1, 2017).  In the case, the plaintiff insured purchased a property and obtained a title insurance policy from the defendant title insurance company.  Six months later, the insured received an offer to purchase the property for $1,900,000, but the purchaser subsequently discovered a previously undisclosed sewer easement on the property and offered $1,400,000 instead.  The insured then sent the title insurance company a letter demanding $745,000 and, three weeks later, filed this action.  The title insurance company then accepted the claim and informed the insured that it would obtain an appraisal to determine the insured’s loss.  Two months later, it sent the insured a check for $68,000, along with appraisals of the property with and without the easement as of the date the insured purchased the property.  The insured refused to accept the check and continued with this action.  The title insurance company then filed a motion for summary judgment.

The Court granted the title insurance company’s motion in part and denied it in part.  First, the Court granted the motion to the extent the title insurance company argued that its attempted payment to the insured was timely.  The insured had argued that the title insurance company had 30 days from the date it accepted the claim to make a payment because the policy states, “[w]hen liability and the extent of loss or damage have been definitely fixed in accordance with these Conditions, the payment shall be made within 30 days.”  However, the Court held that the acceptance of a claim did not mean the extent of loss has been “definitively fixed,” and to hold otherwise would be “absurd” because it would deprive the title insurance company of some of its options when accepting a claim, such as litigating to clear a title defect.  Second, the Court denied the motion because it held there were factual disputes as to whether the title insurance company’s tender of payments was sufficient under the policy.  Among other things, the Court found that there were issues of fact as to what date should be used in calculating the insured’s loss, and whether the title insurance company’s appraisals appropriately determined the loss.

For a copy of the decision, please contact Michael O’Donnell at modonnell@riker.com or Clarissa Gomez at cgomez@riker.com.

New York Supreme Court Grants Summary Judgment and Holds Dock Did Not Violate Restrictive Covenant

Posted on by rd_admin

The New York Supreme Court, Warren County, recently granted a motion for summary judgment and held that an articulating dock did not violate a lakefront community’s restrictive covenant.  See Tedeschi v Lake George Park Com’n, 56 Misc. 3d 1215(A) (Sup. Ct. 2017).  In the case, plaintiff and defendants each own property in a lakefront community.  Owners in the community own an undivided interest in the community’s common areas, including a beach, boardwalk, and main dock, and are subject to various restrictive covenants, including one that they “shall not erect or move any building or obstruction on” said common areas.  Some of the owners also individually own boat slips at the main dock, from which they typically add finger docks extending perpendicularly from the main dock.  Defendants received permission from the community association to add an articulating dock, which appears similar to the other finger docks, but is attached to the main dock via a “lift” that allows defendants to bring the dock into the air and out of the water during the winter.  Plaintiff brought this action alleging that defendants’ articulating dock violated the restrictive covenant because it was a prohibited “building or obstruction” on the main docks.  The parties cross-moved for summary judgment.

The Court denied plaintiff’s motion, granted defendants’, and dismissed the action.  First, the Court held the law favors the free and unencumbered use of real property, and covenants restricting use are strictly construed against those seeking to enforce them.  Second, the Court held that the lift on the articulating dock was not a “‘building’ in any reasonable, common or normal sense in which that word is used.”  Third, the Court found that the dock was attached to the side of the main dock and did not restrict access or use of the dock and, therefore, it was not an “obstruction.”  Finally, the covenant did not contain any language indicating that the restriction on obstructions included visual obstructions, as plaintiff alleged here.  Accordingly, plaintiff’s claim was dismissed.

For a copy of the decision, please contact Michael O’Donnell at modonnell@riker.com or Clarissa Gomez at cgomez@riker.com.

Massachusetts Appellate Court Holds Lender Not Entitled to Equitable Subrogation

Posted on by rd_admin

A Massachusetts appellate court recently affirmed a trial court’s denial of a lender’s equitable subrogation claim, holding that there was no equitable reason to grant the lender a lien on one spouse’s interest in a property after her husband, the mortgagor, passed away.  See Wells Fargo Bank, N.A. v. Comeau, 87 N.E.3d 577 (Mass. App. Ct. 2017).  In the case, defendant Nancy and her husband, William, owned a house as tenants by the entirety.  In 2003, the couple encumbered the property with a mortgage in the amount of $150,000, and only William executed the note.  In 2005, William refinanced the 2003 loan through a $300,000 loan from plaintiff’s predecessor.  Nancy did not execute the 2005 mortgage or the 2005 note.  William passed away in 2008, and his undivided interest in the property passed to Nancy.  Plaintiff did not make a claim against William’s estate for the unpaid 2005 note, and the statute of limitations on the claim expired.  Plaintiff then brought this action against Nancy, seeking to have the 2005 mortgage equitably subrogated to the 2003 mortgage’s position encumbering Nancy’s interest in the property.  The parties cross-moved for summary judgment and the trial court denied plaintiff’s motion, holding that it was not entitled to equitable subrogation here.

On appeal, the appellate court affirmed.  The court first distinguished the three main approaches courts take regarding how a subrogee’s conduct affects subrogation:  (i) the majority approach, in which equitable subrogation is allowed unless the subrogee had actual knowledge of an intervening lien; (ii) the minority approach, in which the courts bar equitable subrogation if the subrogee has either actual or constructive knowledge of the lien; and (iii) the approach advocated by the Restatement, in which the court does not look at the subrogee’s knowledge but instead applies principles of equity.  The court here then determined that Massachusetts uses the third, equitable approach to subrogation claims.

Applying this analysis, the court held that plaintiff was not entitled to equitable subrogation.  First, the loan documents and other documentary evidence indicate that plaintiff’s predecessor intended to receive an encumbrance on William’s interest in the property subject to any existing encumbrances, which would have included Nancy’s right of survivorship.  Thus, there was no evidence that the lender made a mistake.  Second, the court held that plaintiff could have made a claim against William’s estate for the amount due on the note.  The fact that it did not do so did not entitle it to “materially prejudice[]” Nancy by “expos[ing] her to the risk of a foreclosure if she did not pay a debt that only her deceased husband was obligated to pay.”  Finally, the court stated that equitable subrogation existed to prevent unjust enrichment, which is not at risk here.  “While Nancy’s interest in the property was no longer at risk of being terminated in the event of a future foreclosure relating to the 2003 mortgage, it was William’s liability on the 2003 note that was extinguished by the 2005 loan, not Nancy’s, because she was not liable on either note.”

For a copy of the decision, please contact Michael O’Donnell at modonnell@riker.com or Clarissa Gomez at cgomez@riker.com.

New Jersey Appellate Division Holds Non-Debtor Did Not Waive Rights to Levied Monies in Joint Account

Posted on by rd_admin

In a
decision approved for publication, the New Jersey Appellate Division recently
held that a debtor’s spouse did not waive her right to dispute a bank levy on a
joint account when her attorney executed a consent agreement and represented to
the creditor that she agreed to the same. See Banc of Am. Leasing
& Capital, LLC v. Fletcher-Thompson Inc., 2018 WL 259383 (N.J. Super.
Ct. App. Div. Jan. 2, 2018). In the case, plaintiff obtained a judgment against
defendant Kurt Baur, among others, and domesticated the judgment in New Jersey.
The next year, plaintiff levied on a joint bank account held by Kurt and his
wife, Kristi. Plaintiff filed a motion for turnover of the funds, and Kurt and
Kristi opposed, arguing that the funds are Kristi’s personal property and
include exempt pension funds. While the motion was pending, plaintiff and the
judgment debtors entered a consent order whereby the debtors agreed to make
certain payments to plaintiff, and plaintiff agreed to release the levied
funds. The debtors’ counsel executed the agreement on their behalf and,
although Kristi did not execute the agreement, counsel represented to plaintiff
that Kristi consented to it. The debtors then defaulted on the agreement and
plaintiff filed a new motion seeking a turnover of the funds. The trial court
granted the motion, holding that “[t]here was an agreement reached by the
parties to avoid turnover of the funds. The terms of the agreement appear to
have been breached and so turnover is granted.”

On appeal,
the Appellate Division reversed the trial court’s decision. The Appellate
Division held that plaintiff failed to demonstrate that the levied funds belong
to Kurt. Kristi had submitted evidence that “the funds in the joint account
derive solely from her earnings, teacher’s pension and reimbursements for funds
paid out for Kurt’s business expenses. She argues that the funds are not only
hers alone, but also exempt from seizure as protected pension payments.” The
trial court, however, did not make a determination of whether the funds
belonged to Kristi, nor whether they were exempt as pension funds, because it
found Kristi consented to the turnover through the consent order. The Appellate
Division rejected the trial court’s finding that the turnover of funds was
proper under the consent agreement, finding instead that the agreement’s terms
did not include a waiver of Kurt and Kristi’s right to dispute the bank levy.
The Appellate Division held that, although the debtors’ counsel represented
that Kristi consented to the agreement, she “was not a party to the underlying
litigation, nor a signatory to the agreement, [and] did not forfeit her right
to her sole funds deposited in the joint account.” The Appellate Division then
remanded the action in order for the trial court to determine whether the funds
belong to Kurt and whether they are exempt. This holding reiterates the fact
that creditors levying on joint accounts must prove that the funds belong to
the debtor, and that any consent agreements, particularly those involving
non-parties, should be fully executed by the involved individuals/entities and
not just counsel, and should be clear as to what rights or arguments are being
waived.

For a copy
of this decision, please contact Michael O’Donnell at modonnell@riker.com or
Clarissa Gomez at cgomez@riker.com.

New York Court Denies Motion for Summary Judgment from Property Purchasers and Holds Deed May Be Void Ab Initio

Posted on by rd_admin

The Surrogate’s Court of New York, Queens County recently denied respondents’ motion for summary judgment and held there were issues of fact as to whether a deed conveying a property from a man in a nursing home may be void ab initio.  See In re Rosenblatt, 57 Misc. 3d 1209(A) (N.Y. Sup. Ct. 2017).  In the case, the seller entered a nursing home in 2004 after suffering a stroke.  Although the facts surrounding the conveyance are disputed, at some point in 2011, a real estate broker entered into a contract with the seller whereby the seller was to convey his real property in exchange for $75,000.  Among the terms of the contract was a provision that the broker could not assign the contract without the seller’s prior written consent.  Three weeks after executing the contract, the broker assigned the contract to Kami Homes, Inc. (“Kami”) in exchange for $55,000. However, the seller did not give prior written consent to the assignment.  Six months after the closing, Kami sold the property to a third party for $365,000.  The decedent passed away later that year, and the petitioner brought this action to vacate the deed.  Kami, Kami’s president, the third party, and the lender to whom the third party mortgaged the property all brought motions for summary judgment to dismiss the action against them.

The Court found that there were issues of material fact and denied the motions.  First, the Court held that the respondents’ claim that they recorded a “facially valid acknowledged deed” from the seller was “misguided.”  The facts surrounding the transaction—including conflicting testimony from the participants, the relationship between the broker and the attorney he retained for the seller, and that apparently no one advised the seller that Kami was going to pay an additional $55,000 for the right to the contract—indicated that “a scenario exists that [the participants] knew from the inception that this was to be a so-called ‘contract flip’ or ‘wholesaling’ of the subject real property and they concealed it from the decedent.”  Moreover, the contract required the seller’s prior written consent before any assignment, which was not obtained even though the assignment “seemingly benefited everyone other than” the seller.

Second, even without all of these issues surrounding the respondents’ failure to disclose material facts to the seller, the Court held that there was an issue of fact as to whether the seller had the mental capacity to enter into the contract.  Although the respondents produced an affidavit from the seller that he did not suffer from any mental disabilities, this document was purportedly executed almost a year after he signed the contract and two weeks before his death.  More importantly, his medical records stated that he had dementia and other issues that indicated that he lacked the capacity to sell the property.  Finally, the Court denied the motions of the third-party purchaser and the mortgagee, holding that “their claims that they are a bona fide purchaser and a lender for value provides no respite if the deed from the decedent to Kami is ultimately determined to be void ab initio” for the foregoing reasons.

For a copy of the decision, please contact Michael O’Donnell at modonnell@riker.com or Clarissa Gomez at cgomez@riker.com.

Get Our Latest Insights

Subscribe