MORETRAN REALTY, LLC VS. BALDEV PATEL AND SON, LLC(L-9032-14, BERGEN COUNTY AND STATEWIDE)
A-2753-15T3
N.J. Super. App. Div. UAug 23, 2017Background
- Moretran Realty purchased commercial property from Baldev Patel and Son, LLC for $1.6M; parties agreed $100,000 would be escrowed for environmental issues tied to two underground storage tanks (USTs) and U-Haul–identified contamination. The escrow agreement released funds upon the sooner of six months from closing or U-Haul assuming cleanup "without reservation." Personal guarantees from Baldev and Chetan Patel accompanied the escrow.
- Closing occurred September 11, 2012. U-Haul repeatedly disclaimed responsibility for cleanup; defendants did not agree to extend the six-month escrow period.
- Pre-closing reports: TRC identified multiple Areas of Concern (AOCs), recommended further investigation for some (including two USTs not tied to prior NJDEP NFA letters), and recommended NFA for others (including the two 1,000-gallon USTs removed in 1999 and 2005, which had NJDEP NFA letters).
- Post-closing investigation: ERM groundwater sampling (Jan 2013) found no evidence of contamination migrating from the U-Haul site to the Property; ECM later proposed borings contingent on confirmation of on-site contamination, but no remediation or binding agreement to perform work was executed.
- Procedural posture: Moretran sued under the Spill Act and common-law theories seeking declaratory relief, treble damages, indemnity, and to retain escrowed funds for cleanup. Trial court denied Moretran's partial summary judgment, granted defendants' cross-motion for summary judgment, ordered release of the escrow funds, and dismissed plaintiff's complaint with prejudice. Appellate Division affirmed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether escrow agreement required release of funds after six months despite ongoing disputes | Escrow should remain because contamination existed or further investigation was warranted | Escrow language unambiguous: funds release upon sooner of six months from closing or U-Haul assuming cleanup; six months expired and U-Haul never assumed responsibility | Held: escrow released at six months; plain contract language governed and required release |
| Whether plaintiff produced sufficient evidence of contamination within the six-month escrow period to bar release | TRC report, proposed ECM scope, and other materials create factual dispute about contamination | Defendants: no competent evidential material showing contamination during escrow period; ERM testing showed no migration | Held: plaintiff failed to produce competent evidence of contamination within six months; no genuine issue of material fact |
| Whether post-six-month investigative proposals / later tests could defeat summary judgment or revive escrow obligations | Later proposals and communications (ECM scope, emails) show contamination concerns and intent to remediate, creating triable issues | Such post-escrow proposals do not affect an unambiguous contractual time trigger; even later work was contingent on confirmation of contamination | Held: post-period investigations/proposals irrelevant to escrow-release rule; no proof of contamination later either |
| Whether the record was ripe for summary judgment (need for further factfinding) | Moretran argued the matter was not ripe because investigations and remedial work were ongoing or contemplated | Defendants: contract termination point passed; no evidentiary basis to delay release | Held: summary judgment appropriate; plaintiff failed to present competent evidence creating triable issues |
Key Cases Cited
- Brill v. Guardian Life Ins. Co. of Am., 142 N.J. 520 (discusses standard for viewing evidence on summary judgment)
- Cortez v. Gindhart, 435 N.J. Super. 589 (App. Div.) (describes required proof to defeat summary judgment)
- Kieffer v. Best Buy, 205 N.J. 213 (contract interpretation reviewed de novo; courts must not rewrite contracts)
- M.J. Paquet, Inc. v. N.J. Dep't of Transp., 171 N.J. 378 (contract terms read by plain and ordinary meaning)
- Chubb Custom Ins. Co. v. Prudential Ins. Co. of Am., 195 N.J. 231 (ambiguity allows extrinsic evidence)
- Conway v. 287 Corp. Ctr. Assocs., 187 N.J. 259 (use of extrinsic evidence to ascertain parties' intent)