Brg Harrison Lofts Urban Renewal Llc v. General Electric Company et alBRIEF in OppositionD.N.J.January 23, 2017 UNITED STATES DISTRICT COURT DISTRICT OF NEW JERSEY BRG HARRISON LOFTS URBAN RENEWAL LLC, Plaintiff, vs. GENERAL ELECTRIC COMPANY, ENVIRONMENTAL WASTE MANAGEMENT ASSOCIATES, LLC and ACCREDITED ENVIRONMENTAL TECHNOLOGIES, INC., Defendants. Civ. Act. No. 2:16-CV-06577 PLAINTIFF BRG HARRISON LOFTS URBAN RENEWAL LLC’S BRIEF IN OPPOSITION TO DEFENDANT GENERAL ELECTRIC COMPANY’S PARTIAL MOTION TO DISMISS CHIESA SHAHINIAN & GIANTOMASI PC One Boland Drive West Orange, NJ 07052 (973) 325-1500 Attorneys for BRG Harrison Lofts Urban Renewal LLC SIVE, PAGET & RIESEL, P.C. 560 Lexington Avenue, 15th Floor New York, NY 10022 (212) 421-2150 Attorneys for BRG Harrison Lofts Urban Renewal LLC On the Brief: Dennis M. Toft Ronald L. Israel David M. Dugan Michael K. Plumb On the Brief: Mark A. Chertok (admitted pro hac vice) Margaret C. Macdonald (admitted pro hac vice) Case 2:16-cv-06577-SRC-CLW Document 34 Filed 01/23/17 Page 1 of 24 PageID: 506 i TABLE OF CONTENTS PRELIMINARY STATEMENT .................................................................................................... 1 STATEMENT OF FACTS ............................................................................................................. 4 LEGAL ARGUMENT .................................................................................................................... 7 I. GE’S PARTIAL MOTION TO DISMISS SHOULD BE DENIED .................................. 7 A. The Plain Language of the Agreement’s Release Does Not Apply to BRG’s Noncontract Claims Against GE................................................................. 8 1. The Release Is Limited to Environmental Response Activities ..................................................................................................... 8 2. GE’s Interpretation Contradicts the Plain Meaning of the Release ...................................................................................................... 11 B. Given GE’s Current Position with Respect to GE’s Mercury Contamination Within the Buildings, Sustaining BRG’s Noncontract Claims Is Consistent with the Overall Intent of the Agreement ............................................................................................................. 15 C. The Indemnity Provisions in the Agreement, on Which GE Has Not Moved, Do Not Warrant Dismissal of BRG’s Statutory or Common Law Claims ........................................................................................................... 18 D. To The Extent There Is Any Question As to the Parties’ Intent Reflected in the Agreement, the Court Should Deny GE’s Motion and Discovery Should Proceed ............................................................................. 19 II. IN THE ALTERNATIVE, BRG SHOULD BE GRANTED LEAVE TO AMEND ITS COMPLAINT TO CURE ANY ALLEGED PLEADING DEFICIENCIES ................................................................................................................ 20 CONCLUSION ............................................................................................................................. 21 Case 2:16-cv-06577-SRC-CLW Document 34 Filed 01/23/17 Page 2 of 24 PageID: 507 ii TABLE OF AUTHORITIES Page(s) Cases Alston v. Parker, 363 F.3d 229 (3d Cir. 2004).....................................................................................................20 Bell Atl. Corp. v. Twombly, 550 U.S. 544 (2007) ...................................................................................................................7 Costa Engineering Corp. v. Homsi, 2014 WL 4175715 (N.J. Super. Ct. App. Div. Aug. 25, 2014) ...............................................19 In re Ins. Brokerage Antitrust Litig., 618 F.3d 300 (3d Cir. 2010).......................................................................................................7 Manahawkin Convalescent v. O’Neill, 217 N.J. 99 (2014) ...................................................................................................................19 Pinker v. Roche Holdings, Ltd., 292 F.3d 361 (3d Cir. 2002).......................................................................................................7 Porreca v. City of Millville, 419 N.J. Super. 212 (App. Div. 2011) .....................................................................................12 SC Holdings, Inc. v. A.A.A. Realty Co., 935 F. Supp. 1354 (D.N.J. 1996) ...............................................................................................7 State v. Quaker Valley Farms, LLC, Docket No. A-5710-12T3, 2015 WL 12732835 (N.J. Super. Ct. App. Div. Oct. 13, 2016) ..........................................................................................................................19 Statutes and Rules Fed. R. Civ. P. 15(a)(2) ..................................................................................................................20 N.J.A.C. 7:26C-1.3 ........................................................................................................................10 Fed. R. Civ. P. 8(a)(2) ................................................................................................................7, 20 Fed. R. Civ. P. 12(b)(6)..............................................................................................................7, 20 Case 2:16-cv-06577-SRC-CLW Document 34 Filed 01/23/17 Page 3 of 24 PageID: 508 PRELIMINARY STATEMENT This matter arises out of defendant General Electric Company’s (“GE”) unlawful refusal to remediate its own mercury contamination found in, around and under certain buildings recently purchased by plaintiff BRG Harrison Lofts Urban Renewal LLC (“BRG”) in Harrison, New Jersey (the “Site”). GE and/or its predecessors caused the contamination from decades of operations on the Site, including the use of mercury in connection with GE’s manufacturing of lightbulbs. After BRG demanded that GE clean up its mess, the parties entered into an Indemnification and Settlement Agreement on November 5, 2014 (the “Agreement”) under which GE agreed, with BRG’s cooperation, to remediate the environmental contamination at the Site and to secure a Response Action Outcome (“RAO”) from a Licensed Site Remedial Professional (“LSRP”) as required under applicable New Jersey environmental law. The RAO would verify that the contamination at the property was remediated to be protective of human health and the environment and would allow for the residential redevelopment of the property to proceed. Under the Agreement, the parties agreed to release each other from statutory and common law claims based on “Environmental Response Activities” - a specifically defined term that applies only to those investigative and remedial activities GE is obligated to perform under the Agreement as required to obtain an RAO. The parties agreed to assert claims based on Environmental Response Activities as contract claims under the Agreement and to leave claims based on all other remedial activities undisturbed; i.e., claims based on remedial activities not required to be performed to obtain an RAO were not released. Ironically, until making this motion, GE has emphatically and repeatedly taken the position that the work BRG seeks to compel GE to undertake to remediate GE’s mercury Case 2:16-cv-06577-SRC-CLW Document 34 Filed 01/23/17 Page 4 of 24 PageID: 509 2 contamination in and around the Site’s buildings is not an Environmental Response Activity. Consistent with this position, GE has steadfastly refused to investigate and remediate its legacy contamination. 1 Astonishingly, GE is now arguing that the remediation of its own mercury within the building is an Environmental Response Activity only to invoke the release provisions of the Agreement. In essence, GE seeks a broad definition of Environmental Response Activities in order to obtain a broad release, but a narrow reading of Environmental Response Activities to limit its obligations to remediate its contamination, and force someone other than GE (either BRG, a small landowner with far fewer financial resources, or the government) to remediate the contamination that GE generated but then left behind. Allowing GE to have it both ways would be contrary to the plain language of the Agreement and the parties’ intent in negotiating the Agreement, and would be unjust. As a result of GE’s refusal to remediate its mercury contamination, BRG filed this lawsuit. In its First Amended Complaint (the “Amended Complaint”) BRG asserts two contract- based claims against GE (Counts Two and Three) to enforce BRG’s rights under the Agreement. These claims are based on BRG’s contention that GE is contractually obligated to remediate the contamination within the building superstructures because such remediation activities are 1 GE’s position with respect to its obligations to address the mercury contamination at the Site is unfortunately unsurprising, as it routinely attempts to avoid cleaning up pollution its manufacturing facilities leave behind. For example, when faced with a similar mercury-laden site on Grand Street it Hoboken, NJ, GE refused to cooperate with EPA, forcing EPA to issue a unilateral order to force GE to remediate the site. At the time the unilateral order was issued, then-EPA Regional Administrator stated, “We are taking this legal action because we have been unable to reach an amicable cleanup agreement with GE. The contamination forced hard- working artists and their families out of their homes. We expect those responsible for creating the problem to take responsibility for their past actions.” EPA Orders GE To Demolish Mercury- Contaminated Condo in Hoboken and Clean Up Site; Estimated Cost of $4 Million (April 3, 1998 EPA news release, at https://yosemite.epa.gov/opa/admpress.nsf/ 1ef7cd36224b565785257359003f533f/812e723ef644211285257266006ddf33!OpenDocument (last visited January 23, 2017)). Case 2:16-cv-06577-SRC-CLW Document 34 Filed 01/23/17 Page 5 of 24 PageID: 510 3 Environmental Response Activities (i.e., they will be required to obtain an RAO). GE has not moved to dismiss those counts. In the alternative, BRG has asserted common law and statutory claims (Counts One, Four, Five, Six, Seven, Eight, Nine, Eleven and Twelve), because if such remediation activities are not Environmental Response Activities, then by definition they are not included within the scope of the Agreement’s release. Despite BRG’s well-settled procedural right to plead in the alternative, GE, before any discovery and on a pre-answer motion, is seeking dismissal of all of BRG’s common law and statutory claims. GE’s motion is based on an incredibly broad interpretation of the Agreement’s release that would ignore and render superfluous its critical language to make it applicable to claims based on any remediation, regardless of whether or not the remediation is required to obtain an RAO. This disingenuous interpretation and GE’s piecemeal motion are a transparent ploy to allow GE to prevail now on a broad release interpretation and later, when it will inevitably argue, based on a narrow interpretation of the RAO requirement, that it is not contractually required to remediate its contamination in the buildings. If successful in its gamesmanship, GE will be able to absolve itself from liability and to walk away, leaving someone else to clean up the contaminated Site. As set forth below, GE’s motion fails at the outset simply because the plain language of the Agreement limits any release only to those claims relating to the specifically defined and negotiated term “Environmental Response Activities.” If the Court does not agree at the end of the day with BRG’s interpretation as a matter of law, then discovery concerning the parties’ intentions in entering into the Agreement and, if necessary, an examination of the circumstances surrounding the Agreement will be required. Moreover, the central issue of whether the remediation of GE’s mercury from the Site’s superstructures as well as under and around the Case 2:16-cv-06577-SRC-CLW Document 34 Filed 01/23/17 Page 6 of 24 PageID: 511 4 buildings falls within the Agreement’s definition of Environmental Response Activities has not been determined yet and cannot be determined without discovery on, among other things, the nature and extent of GE’s contamination. It may be that when the Court later resolves that issue, the parties’ rights and obligations under the Agreement will fall into place, including with respect to the Agreement’s release language. Until that happens, though, and without discovery, there is a critical, open question of whether the Agreement’s release applies to BRG’s statutory and common law claims that warrants denial of GE’s motion. In the meantime, granting GE’s premature motion would serve no practical purpose by narrowing the issues or otherwise. Discovery on all of BRG’s claims will revolve around the same central set of facts and issues. GE’s motion should therefore be denied in its entirety. STATEMENT OF FACTS In June 2015, BRG acquired the Site, consisting of two lots with three buildings in Harrison, New Jersey. 2 BRG’s plan (about which GE was well aware) was to redevelop the site for multi-family residential use by reusing the existing buildings. The three buildings on the Site are designated Buildings A, B and C. GE and its predecessors had owned the Site and conducted operations in the Buildings from 1882 until 1976. The Site comprises a portion of a much larger manufacturing campus GE and its predecessors historically owned and operated in Harrison. GE’s decades of operations utilized mercury in instruments used to manufacture electronics, including, among other things, mercury pumps, mercury-vapor rectifier tubes, and mercury-vapor diodes. GE’s operations involved the storage, handling and disposal of mercury at the Site. 2 The facts set forth here are drawn from the First Amended Complaint and should be taken as true for purposes of this motion. Case 2:16-cv-06577-SRC-CLW Document 34 Filed 01/23/17 Page 7 of 24 PageID: 512 5 BRG executed a contract to purchase the Site in February 2012. An environmental investigation of the Buildings conducted for BRG in June 2012 revealed a very small area of approximately 512 square feet of mercury contamination on the third floor of Building C. BRG provided GE with the results of that investigation. GE subsequently directed its environmental consultant, AMEC, to conduct remedial investigation sampling at the Site from May through July 2014. In September 2014, GE directed AMEC to submit a Preliminary Assessment to the New Jersey Department of Environmental Protection (“NJDEP”). The Preliminary Assessment, for reasons GE has never explained, did not include the results of the remedial investigation sampling, a troubling omission, particularly given GE’s knowledge that BRG plans to convert the Site to residential housing. 3 On November 5, 2014, BRG and GE, with asymmetrical information regarding the nature and extent of mercury at the Site, entered into the Agreement, which forms the basis of GE’s partial motion to dismiss. As set forth in detail below, the Agreement includes releases for past costs, prior environmental investigations and GE’s prior response activities. (Declaration of Cynthia S. Betz, Esq. (“Betz Decl.”), Ex. A § 2(a)). The Agreement also releases noncontractual claims based on past and future “Environmental Response Activities” which are those costs required to obtain a Site-wide Response Action Outcome (“RAO”), certifying that remediation 3 In fact, discovery on this glaring omission may reveal that GE had much more knowledge concerning the extent of mercury contamination than GE would have the Court believe, which could result in additional claims against GE. GE’s unexplained failure to provide BRG with complete and accurate information regarding the results of mercury sampling at the critical time when BRG and GE were about to enter into the Agreement and when GE knew BRG was under contract to purchase the Site, is problematic. Case 2:16-cv-06577-SRC-CLW Document 34 Filed 01/23/17 Page 8 of 24 PageID: 513 6 of the Site is complete and that the Site is not a risk to human health or the environment. (Id. § 2(b)). 4 In October 2015 (after BRG had closed on the purchase of the Site), BRG’s environmental consultants conducted a mercury screening in Building C, in preparation for the anticipated limited mercury remediation. That screening revealed mercury concentrations in vapor samples that exceeded NJDEP Rapid Action Levels for Indoor Air (1µg/m 3 ) on all floors of Building C and were significantly higher than the mercury detected in pre-acquisition studies. 5 Further sampling revealed mercury concentrations that also exceeded NJDEP Rapid Action Levels for Indoor Air (1µg/m 3 ) on all floors of Building B and on the second floor of Building A. More recent off-site mercury vapor monitoring conducted by GE’s consultant shows that the Site is an ongoing source of mercury contamination that threatens public health or the environment. 6 BRG has repeatedly demanded that GE investigate and remediate the mercury contamination at the Site, including in building materials, per GE’s obligations in the Agreement. 4 The portions of the release relevant to GE’s motion are quoted and discussed in the Legal Argument section below. 5 The Rapid Action Level for mercury is a concentration of mercury vapor twice the health-based indoor air screening value. Concentrations that meet or exceed Rapid Action Levels are considered Immediate Environmental Concerns by NJDEP. 6 The Agreement requires GE to provide “from time to time, at BRG’s reasonable request, copies of final data that has not been included in any final report.” BRG formally requested all data in GE’s possession or control relating to mercury contamination on the Site on three occasions. GE refused such requests and withheld this pertinent information. On October 7, 2016, one day after the Complaint was filed in this action, Anchor QEA, at the direction of GE, finally provided BRG with a Mercury Data Summary Report dated October 2016. This report includes mercury data that previously had not been provided to BRG despite repeated requests for that data, including data showing off-site impacts and additional data demonstrating that the Site, including the buildings, is an ongoing source of mercury contamination that poses a threat to public health or the environment. Case 2:16-cv-06577-SRC-CLW Document 34 Filed 01/23/17 Page 9 of 24 PageID: 514 7 Despite its knowledge regarding the mercury contamination on the Site and in the Buildings, GE has refused to remediate mercury on the Site, leading to the filing of this action. LEGAL ARGUMENT I. GE’S PARTIAL MOTION TO DISMISS SHOULD BE DENIED Rule 12(b)(6) authorizes dismissal of a complaint for failure to state a claim upon which relief can be granted. Fed. R. Civ. P. 12(b)(6). “Under Rule 8(a)(2), a complaint need present ‘only a short and plain statement of the claim showing that the pleader is entitled to relief in order to give the defendant fair notice of what the . . . claim is and the grounds upon which it rests.” In re Ins. Brokerage Antitrust Litig., 618 F.3d 300, 314 (3d Cir. 2010) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007) (omission in original)). Under this standard, “[t]he Court may not dismiss a complaint unless plaintiff can prove no set of facts which would entitle him to relief.” SC Holdings, Inc. v. A.A.A. Realty Co., 935 F. Supp. 1354, 1360-61 (D.N.J. 1996). “The issue is not whether a plaintiff will ultimately prevail but whether the claimant is entitled to offer evidence to support the claims.” Twombly, 550 U.S. at 583. To withstand a motion to dismiss, then, a plaintiff must allege “only enough facts to state a claim for relief that is plausible on its face.” Id. at 570. Accordingly, when evaluating a 12(b)(6) motion, a court must “accept all factual allegations as true, construe the complaint in the light most favorable to the plaintiff, and determine whether, under any reasonable reading of the complaint, the plaintiff may be entitled to relief.” Pinker v. Roche Holdings, Ltd., 292 F.3d 361, 374 n.7 (3d Cir. 2002). As set forth below, GE’s partial motion to dismiss should be denied based on both the allegations in the Amended Complaint - accepted as true for purposes of this motion - and the plain language of the Agreement and its release provisions. Case 2:16-cv-06577-SRC-CLW Document 34 Filed 01/23/17 Page 10 of 24 PageID: 515 8 A. The Plain Language of the Agreement’s Release Does Not Apply to BRG’s Noncontract Claims Against GE GE’s partial motion to dismiss is a baseless attempt to re-write the Agreement by ignoring its plain language, particularly in the release, which the parties specifically negotiated. As set forth below, the release provision on which GE relies pertains only to “Environmental Response Activities” - a specifically defined term that GE suggests should be interpreted much more broadly than any reasonable reading of the language would warrant, and, worse yet, on a pre-answer motion to dismiss with no discovery on the issue. 1. The Release is Limited to Environmental Response Activities A plain reading of the release makes clear that BRG agreed to release only specifically defined categories of claims against GE, namely, those defined in the Agreement as (i) “Past Costs,” (ii) “Prior Environmental Investigations,” (iii) “GE Response Activities” and (iv) “Environmental Response Activities.” The release, which is contained in Section 2 of the Agreement, covers two categories of claims, separated into two subprovisions, (a) and (b). Section 2(a) applies to claims based on past environmental investigation/remediation activities and associated costs, namely: (i) Past Costs, defined as “all costs incurred by GE or BRG related to the Site on or before the Effective Date, whether known or unknown by the Parties, including without limitation, BRG’s Past Costs and GE’s Past Costs.” (Betz Decl., Ex. A § 1(g), pg. 6). Thus, the parties agreed to assume their own previously incurred costs relating to the contamination at the Site, to the extent they were incurred before November 5, 2014, when the Agreement was executed. (ii) Prior Environmental Investigations, defined as the following activities conducted by BRG and the “Vo-Toys Parties” (which sold the Site to BRG): (1) the Preliminary Assessment and Site Investigation, dated January 2013; (2) a sub-slab soil gas investigation and indoor sampling at the Site; (3) an Underground Storage Tank removal; and (4) the engagement of a Licensed Site Remediation Professional. (Betz Decl., Ex. A, first “WHEREAS” clause on pg. 2). Case 2:16-cv-06577-SRC-CLW Document 34 Filed 01/23/17 Page 11 of 24 PageID: 516 9 Thus, BRG agreed not to pursue from GE payment for these particular costs for which BRG had already paid in connection with the purchase of the Site. (iii) GE Response Activities, defined as the environmental investigations and/or remediation activities previously conducted by GE, including the “planning, design, and implementation of services, fieldwork and other work described in the AMEC Environment & Infrastructure, Inc. (“AMEC”) Proposals and Scopes of Work dated June 19 and 20, 2013.” (Betz Decl., Ex. A, second “WHEREAS” clause on pg. 2). Thus, GE would not seek to recover from BRG any costs that it had expended for this particular work. Particularly relevant to GE’s motion, Section 2(b) of the Agreement releases noncontractual claims based only on past and future “Environmental Response Activities” at the Site. Section 2(b) reads: (iv) For the purpose of limiting the nature of any claims between the Parties relating to any Environmental Response Activities to contractual claims under this Agreement, from and after the Indemnity Effective Date, the Parties agree to and hereby do specifically waive, release, covenant not to sue and forever discharge each other with respect to any and all past and present costs, damages, claims, penalties and causes of action and/or allegations of liability, whether asserted or unasserted, that the Parties ever had, now have, or may have in the future arising out of or relating in any way to the Environmental Response Activities, except for those contractual claims set forth in Section 2(c) below. This release applies to anything which has happened prior to the Effective Date, and expressly[,] absolutely, unconditionally and irrevocably applies to any and all past and present costs, damages, claims, penalties and causes of action and/or allegations of liability, whether asserted or unasserted, that the Parties ever had, now have, or may have in the future (other than to enforce the obligations and requirements of this Agreement) arising out of or relating in any way to the Environmental Response Activities. (Betz Decl., Ex. A § 2(b), pg. 7) (emphasis added). The phrase “Environmental Response Activities” appears three times in Section 2(b), thus making clear the parties’ intention to limit the release to Environmental Response Activities, which the Agreement specifically defines as follows: [A]ll environmental activities of any kind carried out, in the past or the future, at or near the Site in connection with conditions arising out of GE’s or RCA’s prior Case 2:16-cv-06577-SRC-CLW Document 34 Filed 01/23/17 Page 12 of 24 PageID: 517 10 activities at the Former RCA Facility, including on-Site investigations or activities, off-Site investigations or activities, response actions, remedial actions, mitigation or abatement investigations or activities, cleanup and removal costs, which activities shall also include all required actions of any kind with regard to VI investigation and mitigation, installation, operation and maintenance of all Controls, obtaining any required remedial action permits and posting required financial assurances, conducting all maintenance, monitoring and reporting requirements related to such Environmental Response Activities and paying all costs and expenses relating thereto, all as required to obtain an RAO (as defined below) from an LSRP, and to comply with any and all requirements after issuance of such RAO. (Betz Decl., Ex. A § 1(c), pg. 5) (emphasis added). The language “all as required to obtain an RAO . . . from an LSRP, and to comply with any and all requirements after issuance of such RAO” is a critical and deliberate limitation of the term “Environmental Response Actions” and, in turn, on the scope of the release in Section 2(b). An RAO, or Response Action Outcome, is defined under the New Jersey Administrative Code as: a written determination by a licensed site remediation professional that the site was remediated in accordance with all applicable statutes, rules and guidance, and based upon an evaluation of the historical use of the site, or of any area of concern at that site, as applicable, and any other investigation or action the Department deems necessary, there are no contaminants present at the site, at the area of concern or areas of concern, or at any other site to which a discharge originating at the site has migrated, or that any contaminants present at the site or that have migrated from the site have been remediated in accordance with applicable remediation statutes, rules and guidance and all applicable permits and authorizations have been obtained. N.J.A.C. 7:26C-1.3 (emphasis added). Simply put, noncontractual claims based on past or future environmental investigatory and remedial activities at the Site that are required to obtain an RAO are covered by the release. Noncontractual claims based on investigatory/remedial activities that are not required to obtain an RAO are not covered by the release, and thus such claims are permissible. Case 2:16-cv-06577-SRC-CLW Document 34 Filed 01/23/17 Page 13 of 24 PageID: 518 11 The limitation on the scope of the release in Section 2(b) to Environmental Response Activities was not an oversight. In addition to appearing three times in Section 2(b), the term also appears twice in the preamble, which provides in part: WHEREAS, the Parties recognize that it is necessary and appropriate to carry out further Environmental Response Activities (as defined below), as identified in AMEC’s additional scopes of work issued prior to [November 5, 2014], including the planning, design, and implementation of services, fieldwork and other work, and that the additional activities beyond those described in AMEC’s Proposals and Scopes of Work issued prior to the Effective Date may be also necessary and appropriate. (Betz Decl., Ex. A, last “WHEREAS” clause on pg. 2) (emphasis added). The Agreement’s preamble later provides: WHEREAS, in order to facilitate GE’s performance of the Environmental Response Activities and to allow BRG to redevelop the Site in accordance with the Redevelopment Plan . . ., the Parties wish to fully resolve their differences concerning responsibility for (i) all Past Costs, and (ii) all future actions and costs related to Environmental Response Activities, in each case without admitting any fact, responsibility, fault or liability in connection with the Site. (Betz Decl., Ex. A, last “WHEREAS” clauses on pg. 3) (emphasis added). 2. GE’s Interpretation Contradicts the Plain Meaning of the Release GE’s interpretation of the Release is baseless. To the extent GE is arguing that BRG intended to release GE from noncontractual claims arising out of all past activities that contributed to the state of the Site as of November 5, 2014, its interpretation completely ignores the release’s consistent use of the term “Environmental Response Activities.” If the parties wanted such a broad release, the parties could easily have used unqualified, general release language such as that found in the standard All-State Legal release forms, thus releasing all claims to date except those based on obligations to be performed under the Agreement (as is the case with most standard litigation settlement agreements). Or, the parties could have agreed Case 2:16-cv-06577-SRC-CLW Document 34 Filed 01/23/17 Page 14 of 24 PageID: 519 12 upon a broader definition of Environmental Response Activities, including by deleting the definition’s overarching reference to RAO-required activity. But that is not what the parties chose to do. The parties instead chose to leave undisturbed statutory and common law claims based on environmental remediation/investigation unrelated to securing an RAO. To read the term “Environmental Response Activities” more broadly would render meaningless or useless the language limiting the definition to those activities required to obtain an RAO and thus run afoul of the fundamental contract interpretation principle that a contract “should not be interpreted in a way to render one of the terms meaningless.” Porreca v. City of Millville, 419 N.J. Super. 212, 232-33 (App. Div. 2011) (also noting that basic contract principles are used to determine the meaning of a release and that “a basic principle of contract interpretation is to read the document as a whole in a fair and common sense manner”) (quoting Hardy ex rel. Dowdell v. Abdul-Matin, 198 N.J. 95, 103 (2009), and Cumberland County Improvement Auth. v. GSP Recycling Co. Inc., 358 N.J. Super. 484, 497 (App. Div. 2003)). 7 As to contractual waivers specifically, GE acknowledges in its brief that a waiver of statutory rights must be “clearly and unmistakably established, and contractual language alleged to constitute a waiver will not be read expansively.” (GE’s Br. at 28) (citing Red Bank Reg’l Ed. 7 GE has improperly paraphrased the release in a few different, self-serving ways to see which one might stick. One example is on page 25 of its brief, in which GE states that the term Environmental Response Activities “includes” every action required to obtain an RAO. This is not at all correct. Environmental Response Activities are necessarily those required to obtain an RAO. If the parties had wished to define Environmental Response Activities as all environmental investigation/remediation “including such activities required to obtain an RAO,” then they could easily have used that language. Of course, if they had done so, then GE would be responsible under the terms of the Agreement for “all environmental activities of any kind carried out, in the past or in the future, at or near the Site in connection with conditions arising out of GE’s or RCA’s prior activities at the Former RCA Facility” without any limitation whatsoever. Case 2:16-cv-06577-SRC-CLW Document 34 Filed 01/23/17 Page 15 of 24 PageID: 520 13 Ass’n v. Red Bank Reg’l High Sch. Bd., 78 N.J. 122, 140 (1978)). As such, any conceivable ambiguity on this issue should be resolved in BRG’s favor, particularly on a motion to dismiss; moreover, toward that end, GE’s recitation of the general judicial disposition in favor of settlements places the cart before the horse. The question GE has raised on this motion is what was allegedly settled and what claims were released. Without determining that issue, that generic principle is of no import. In fact, the issue at the heart of this controversy is whether the remediation of GE’s mercury in the building superstructures is an Environmental Response Activity as defined in the Agreement. BRG’s position has always been that such remediation is required. GE took the unequivocal position before filing its motion that, as a matter of law, the remediation of the superstructure of plaintiff’s buildings is not required to obtain a site-wide RAO, and is therefore not an Environmental Response Activity GE is obligated to perform under the terms of the Agreement. GE has taken this position, for example, in a letter dated April 25, 2016 to BRG’s counsel and, more recently, to the NJDEP and U.S. Environmental Protection Agency (“EPA”) in GE’s August 17, 2016 response to BRG’s Notice of Intent to sue pursuant to the federal Resource Conservation and Recovery Act. 8 As a result, BRG has asserted statutory and common 8 While GE faults BRG for not referring to this letter in its Amended Complaint, the letter, with GE’s self-serving assertions aside, highlights the inconsistent positions GE has taken with respect to its own treatment of the term Environmental Response Activities and the interpretation it urges the Court to take. GE states in its letter “BRG should be familiar with GE’s position that it is not responsible, either under New Jersey law or the parties’ agreement, for addressing building materials not already addressed or to be addressed under the [Remedial Action Work Plan] to achieve a Response Action Outcome (‘RAO’).” GE then goes on to argue that the remediation of its contamination in the building is not required to obtain an RAO. This letter was not included in the Complaint because BRG had no reason to believe that GE would do an about-face for this motion and argue that the remedial activities in question are Environmental Response Activities encompassed by the release. Case 2:16-cv-06577-SRC-CLW Document 34 Filed 01/23/17 Page 16 of 24 PageID: 521 14 law claims in the alternative, as it is free to do, because if GE were somehow correct and remediation of the buildings is not required to obtain an RAO, then by definition that remediation does not constitute an Environmental Response Activity and is therefore not covered by the release, warranting denial of GE’s motion. But GE cannot have it both ways. Either mercury contamination in the Buildings is necessary to obtain an RAO and thus GE must address it pursuant to the Agreement, or it is not necessary to obtain an RAO and the release does not cover claims related to remediation of mercury in the buildings. Illustrating just how disingenuous and inappropriate its motion is, GE argues in its brief that this issue of whether remediation of GE’s mercury in the superstructures is required to obtain an RAO can be addressed at a later date, after the court dismisses Counts One, Four, Five, Six, Seven, Eight, Eleven and Twelve of BRG’s Amended Complaint. (GE’s Br. at 26) (“On a different day, when the substantive merit of BRG’s contract claims are considered, GE will dispute the specific details of BRG’s allegations quoted above concerning the requirements under New Jersey law to obtain an RAO.”). In other words, GE, at the outset of the case, would have this Court hear and decide a partial dispositive motion directed at BRG’s noncontract claims - which will rely on the same central allegations as the contract claims - in the hopes of convincing the Court that the Agreement should provide the sole and adequate remedy for cleaning up GE’s contamination required to obtain an RAO and that noncontract claims are superfluous, and try to destroy federal subject matter jurisdiction in the process. Then, several months down the road (and in another court if GE gets its way), GE would file another motion arguing that remediation of GE’s mercury in the building superstructure is not required to obtain an RAO and that GE therefore has no remaining obligations under the Agreement to remediate its contamination, a result that would leave BRG without a remedy concerning the clean-up of Case 2:16-cv-06577-SRC-CLW Document 34 Filed 01/23/17 Page 17 of 24 PageID: 522 15 GE’s contamination that was the very reason BRG entered into the Agreement. Otherwise stated, GE now suggests that the limiting “RAO” language in the definition of Environmental Response Activities should be disregarded so that the Court will dismiss BRG’s noncontract claims; but GE will later turnaround and rely on the very distinction it is now ignoring to argue that it need not assume responsibility for the remedial activities at issue on the grounds that it is not required to obtain an RAO. In the end, the issue that GE seeks to table for future consideration is inextricably related to the meaning of the Agreement, the scope of the release in the Agreement and, indeed, the merits of GE’s motion to dismiss. The issue that should first be resolved is whether the release in the Agreement is limited to Environmental Response Activities, or should be construed far more broadly, as GE suggests. If the Court determines that the release is limited, it should deny GE’s motion, and the next issue to be resolved will be whether such remedial actions are required to obtain an RAO, and thus are Environmental Response Activities under the Agreement. After that, the parties’ rights and obligations under the Agreement and the applicability or inapplicability of the release will fall into place. In the meantime, GE’s piecemeal motion practice will play no role in simplifying or narrowing the issues, but will serve only to complicate them. B. Given GE’s Current Position with Respect to GE’s Mercury Contamination Within the Buildings, Sustaining BRG’s Noncontract Claims Is Consistent with the Overall Intent of the Agreement While GE’s motion should be denied based on the unambiguous contractual definition of “Environmental Response Activities” standing alone, the overall expression of the parties’ intent in the Agreement further supports the conclusion that the parties agreed that BRG would preserve its noncontract claims against GE unless specifically covered by the release as Environmental Response Activities. The stated purpose of the Agreement was to allow GE to Case 2:16-cv-06577-SRC-CLW Document 34 Filed 01/23/17 Page 18 of 24 PageID: 523 16 conduct remedial activities at the Site - and more specifically, activities required to obtain an RAO (i.e., Environmental Response Activities). Although GE suggests this was solely the product of compromise and that GE would not have left any claims out of the release - a position belied by the clear language of the release - the fact is that GE had a direct, personal interest in taking responsibility specifically for Environmental Response Activities. The Amended Complaint alleges, and GE has never refuted, that GE caused the contamination through its decades of mercury use in its operations. (Amended Complaint ¶¶ 28, 36). It is therefore in GE’s own interest to have control over the manner in which the remediation at the Site takes place with specific respect to obtaining an RAO because GE can, among other things, have direct control over costs and use its own selected consultants to investigate and remediate its own contamination. GE can ensure in its chosen manner the best path to obtaining an RAO and thus protect its own interests. In the meantime, GE has also limited its exposure to BRG for common law and, more importantly, statutory claims for such RAO-related activities (and thus attorneys’ fees and statutory damages) through the Agreement with BRG. The Agreement’s language is entirely consistent with the above-stated intention of the Agreement and GE’s own interests therein by providing, among other things, that: • “[T]he parties recognize that it is necessary and appropriate to carry out further Environmental Response Activities . . . .” (Betz Decl., Ex. A, pg. 1). • The parties’ resolution of their differences, including the provision of releases in the Agreement, was intended “in order to facilitate GE’s performance of the Environmental Response Activities.” (Betz Decl., Ex. A, pgs. 3-4). • “GE shall have the absolute right to perform the Environmental Response Activities described at Exhibit ‘B’ and any modifications thereto in accordance with customary individual standards, the direction of the LSRP and then prevailing laws, including Environmental Laws.” (Betz Decl., Ex. A § 4(a), pgs. 12-13). The Agreement thus provided GE with latitude to conduct the Environmental Response Activities and thereby eliminate its exposure to the NJDEP. Case 2:16-cv-06577-SRC-CLW Document 34 Filed 01/23/17 Page 19 of 24 PageID: 524 17 • GE would be afforded a certain period of time to repair or replace damages resulting from its Environmental Response Activities and that parties stipulated that planned impacts to the property would not be considered damage. (Betz Decl., Ex. A § 4(b)(i), pg. 13). • BRG’s loss of tenants resulting from Environmental Response Activities would be dealt with in a certain manner, including cost-splitting between the parties. (Betz Decl., Ex. A § 4(d), pg. 14). • BRG would be required to cooperate with GE by providing GE with requested documentation and not interfering with the remediation. (Betz Decl., Ex. A § 5(a), pg. 15). • BRG agreed to allow GE to modify remediation plans and allow for potential new or modified source control remedies, VI mitigation measures or other Controls to be selected and implemented by GE subject to certain conditions. (Betz Decl., Ex. A § 5(b), pg. 16). Thus, while the narrow language of the release and specific definition of Environmental Response Activities are unambiguous on their face and thus warrant denial of GE’s motion to dismiss based on its claim of a sweeping release, an examination of the context of the release and expressed intent of BRG and GE in entering into the Agreement remove any doubt of the Agreement’s purpose: To focus on the tasks required to obtain a Site-wide RAO from which both BRG and GE will benefit by avoiding exposure to the NJDEP and, potentially, the EPA, and to allow BRG to renovate the buildings for residential use. The Agreement in no way suggests that BRG intended or agreed to release GE from liability arising out of other contaminants, the removal of which might not be required to obtain an RAO, but the presence of which is nonetheless highly problematic for BRG. To the contrary, GE was well aware of BRG’s plan to redevelop the Site for residential use and that BRG’s plan was premised upon GE fulfilling its obligation to remediate the Site in a manner that allowed for such residential use. Only now that significantly more mercury has been discovered at the Site is GE trying to avoid Case 2:16-cv-06577-SRC-CLW Document 34 Filed 01/23/17 Page 20 of 24 PageID: 525 18 its statutory and contractual obligations. GE’s partial motion to dismiss therefore fails for these reasons as well. C. The Indemnity Provisions in the Agreement, on Which GE Has Not Moved, Do Not Warrant Dismissal of BRG’s Statutory or Common Law Claims GE’s statement in a footnote on page 26 of its brief that it “will show that BRG’s construction of the Agreement ignores the limitations on the scope of GE’s obligations established by the exclusions from the indemnity” in Section 3(b) has no bearing on any of BRG’s claims. Although GE quotes Section 3(b) in its statement of facts, GE does not advance the argument as a basis for its motion and cannot do so now. Nor would such an argument be appropriately resolved on this motion because there is no basis to make the leap that BRG affirmatively assumed the duty to remediate the building superstructures. Unlike GE’s obligation to perform Environmental Response Activities - which is clearly set forth in Section 4(a) of the Agreement - nowhere does the Agreement impose upon BRG, or does BRG assume, the affirmative obligation to remediate the building superstructures. In fact, Section 4(a), like the release, is tied to Environmental Response Activities and the exclusion in Section 3(b) on which GE relies does not apply to Environmental Response Activities. Thus, GE’s misinterpretation aside, if the removal of building materials is necessary to obtain an RAO, then GE will be responsible for removing them under the Agreement, and would indemnify BRG with respect to those activities. Stated somewhat differently, the fact that GE need not indemnify BRG for such remediation does not mean GE was released from any obligation for such remediation; that issue is addressed in the release. In this instance as well, then, a determination must be made as to what must occur to receive an RAO before the issue of what claims have been released is decided. Thus, GE’s fleeting reference to Section 3(b) should be disregarded and, to the extent even considered, deemed inapplicable. Case 2:16-cv-06577-SRC-CLW Document 34 Filed 01/23/17 Page 21 of 24 PageID: 526 19 D. To the Extent There Is Any Question As to the Parties’ Intent Reflected in the Agreement, the Court Should Deny GE’s Motion and Discovery Should Proceed As set forth above, both the plain language of the release and the parties’ intentions as expressed throughout the Agreement demonstrate that BRG released noncontractual claims relating only to Environmental Response Activities - meaning, those remedial activities required to obtain an RAO. If this language is not dispositive in BRG’s favor, then it is inconceivable how there would not at least be either an ambiguity concerning the parties’ intent, or otherwise a question of fact concerning the parties’ intentions sufficient to defeat a motion to dismiss at this early stage of the litigation. In any such scenario, then, following discovery, the parties should set forth their respective interpretations of the Agreement based on the record so that the Court may ascertain the parties’ intent rather than dismissing multiple counts at such an early stage of the proceedings. Such examination may potentially include extrinsic evidence concerning, among other things, the circumstances surrounding the negotiation of the Agreement. See, e.g., Manahawkin Convalescent v. O’Neill, 217 N.J. 99, 118 (2014) (noting that courts enforce contracts “based on the intent of the parties, the express terms of the contract, surrounding circumstances and the underlying purpose of the contract” and that even in interpreting an unambiguous contract, the Court may consider “all of the relevant evidence that will assist in determining [its] intent and meaning”); State v. Quaker Valley Farms, LLC, Docket No. A-5710- 12T3, 2015 WL 12732835, at *9 (N.J. Super. Ct. App. Div. Oct. 13, 2016) (“[T]he court may resort to extrinsic evidence to inform the court’s interpretation of the expressed intent.”); Costa Engineering Corp. v. Homsi, 2014 WL 4175715, at *4 (N.J. Super. Ct. App. Div. Aug. 25, 2014) (“When examining the extrinsic evidence to interpret a contract, a court may consider ‘the particular contractual provision, an overview of all the terms, the circumstances leading up to the Case 2:16-cv-06577-SRC-CLW Document 34 Filed 01/23/17 Page 22 of 24 PageID: 527 20 formation of the contract, custom, usage, and the interpretation placed on the disputed provision by the parties’ conduct.’”). Here, for example, BRG would, if necessary, present evidence concerning, among other things, GE’s historical operations at the Site, the importance of remediating the building (which is intended for residential housing), why the parties agreed to release some types of claims but not others and their mutual interests in agreeing to such approach including the specific benefits to be realized by GE. Pending the discovery and presentation of such facts, GE’s partial motion to dismiss is premature and should be denied. II. IN THE ALTERNATIVE, BRG SHOULD BE GRANTED LEAVE TO AMEND ITS COMPLAINT TO CURE ANY ALLEGED PLEADING DEFICIENCIES The Federal Rules of Civil Procedure require only that BRG provide “a short and plain statement of the claim showing that the pleader is entitled to relief.” Fed. R. Civ. P 8(a)(2). Where a court finds a plaintiff has not adequately alleged its causes of action, the general rule is that the dismissal should be without prejudice and a curative amendment permitted. See, e.g., Alston v. Parker, 363 F.3d 229, 235 (3d Cir. 2004) (where a complaint is dismissed on Rule 12(b)(6) grounds “a District Court must permit a curative amendment, unless an amendment would be inequitable or futile”); accord Fed. R. Civ. P. 15(a)(2) (leave to amend should be granted freely when justice so requires). BRG has alleged more than ample facts in its Amended Complaint to demonstrate its entitlement to relief. Nothing in the Agreement changes that. In the event the Court, however, disagrees with BRG’s interpretation of the plain language of the Agreement and requires additional allegations concerning - for example - the circumstances surrounding the Agreement as they affect the interpretation of the release and GE’s internally inconsistent positions with Case 2:16-cv-06577-SRC-CLW Document 34 Filed 01/23/17 Page 23 of 24 PageID: 528 21 respect thereto as alluded to herein, then BRG respectfully requests leave to amend to cure any deficiencies. CONCLUSION For the reasons set forth above, GE’s partial motion to dismiss should be denied. Dated: January 23, 2017 Respectfully submitted, CHIESA SHAHINIAN & GIANTOMASI PC Attorneys for BRG Harrison Lofts Urban Renewal LLC By: s/Dennis M. Toft DENNIS M. TOFT dtoft@csglaw.com One Boland Drive West Orange, NJ 07052 SIVE, PAGET & RIESEL, P.C. Attorneys for BRG Harrison Lofts Urban Renewal LLC MARK A. CHERTOK, ESQ. mchertok@sprlaw.com MARGARET C. MACDONALD, ESQ. mmacdonald@sprlaw.com 560 Lexington Avenue, 15th Floor New York, NY 10022 (212) 421-2150 (212) 421-1891 (fax) Admitted Pro hac vice Case 2:16-cv-06577-SRC-CLW Document 34 Filed 01/23/17 Page 24 of 24 PageID: 529 UNITED STATES DISTRICT COURT DISTRICT OF NEW JERSEY BRG HARRISON LOFTS URBAN RENEWAL LLC, Plaintiff, vs. GENERAL ELECTRIC COMPANY, ENVIRONMENTAL WASTE MANAGEMENT ASSOCIATES, LLC and ACCREDITED ENVIRONMENTAL TECHNOLOGIES, INC., Defendants. Civ. Act. No. 2:16-CV-06577 CERTIFICATION OF SERVICE The undersigned attorney certifies that on January 23, 2017, he caused the accompanying Brief in Opposition to Defendant General Electric Company’s Partial Motion to Dismiss to be electronically served and filed with the U.S. District Court of the District of New Jersey, using the CM/ECF system. /s David M. Dugan DAVID M. DUGAN Dated: January 23, 2017 Case 2:16-cv-06577-SRC-CLW Document 34-1 Filed 01/23/17 Page 1 of 1 PageID: 530
