BLACK HORSE LANE ASSOC., L.P., a New Jersey limited partnership; United States Land Resources, L.P., a New Jersey limited partnership; United States Realty Resources, Inc., a New Jersey Corporation; and Lawrence S. Berger v. DOW CHEMICAL CORPORATION; Essex Chemical Corporation, a wholly owned subsidiary of Dow Chemical Corporation, a Michigan Corporation; Black Horse Lane Associates, L.P., United States Land Resources, L.P., United States Realty Resources, Inc. and Lawrence S. Berger, Appellants.
No. 00-5031.
United States Court of Appeals, Third Circuit.
Argued Aug. 8, 2000. Filed Sept. 20, 2000.
228 F.3d 275
Kenneth H. Mack (argued), Linda Mack, Fox, Rothschild, O‘Brien & Frankel, Lawrenceville, NJ, Attorneys for Appellees.
BEFORE: BARRY, WEIS and GREENBERG, Circuit Judges.
OPINION OF THE COURT
GREENBERG, Circuit Judge.
I. INTRODUCTION
This matter comes before this court on an appeal by plaintiffs United States Land Resources, L.P. (“USLR“), United States Realty Resources, Inc. (“USRR“), Black Horse Lane Associates, L.P. (“Black Horse“), and Lawrence S. Berger (“Berger“) (collectively “appellants“) from two orders entered by the district court in this matter: (1) the order entered August 10, 1999, granting a motion by appellees Dow Chemical Corporation (“Dow“) and Essex Chemical Corporation (“Essex“) for summary judgment pursuant to
For the reasons that follow, we will affirm the August 10, 1999 and December 16, 1999 orders of the district court in all respects.
II. FACTS and PROCEEDINGS
A. Factual Background
The historical facts in this case are rather straightforward and, insofar as material to this appeal, essentially are not disputed. Appellants, USLR, USRR, Black Horse, and Berger, are related entities: USLR is the general partner in Black Horse, USRR is the general partner of USLR, and Berger is the president of USRR.1 Appellees Essex and Dow also are related entities as Essex is Dow‘s wholly-owned subsidiary by virtue of its purchase of all of Essex‘s stock in 1988.
During the 1980s, Essex owned and operated the Property, where it engaged in the business of preparing adhesive-backed paper products. On or about August 17, 1984, Essex discovered that chemicals it used in that process had leaked into the ground of the Property. In October 1984, Essex entered into environmental cleanup and decommission negotiations with the New Jersey Department of Environmental Protection (“DEP“). Essex submitted a “Clean-Up Plan” to the DEP on December 19, 1985, which the DEP conditionally approved on December 20, 1985.
Prior to Essex‘s submission of the Clean-Up Plan to the DEP, it entered into a sales agreement (“the Agreement“) on September 5, 1985, with USLR to sell the Property to USLR for $3.6 million. The parties do not dispute that appellants were aware of the Property‘s environmental problems at the time that USLR and Essex entered into the Agreement. The Agreement required Essex to obtain and implement an approved Clean-Up Plan at its sole expense. Paragraph 16 of the Agreement set forth Essex‘s responsibilities with respect to the remediation and detoxification of the Property:
The parties acknowledge that the Subject Premises to be conveyed are subject to the provisions of the Environmental Clean-Up Responsibility Act,
N.J.S.A. 13:1K 6 et seq. (“ECRA“) [now named the Industrial Site Recovery Act (“ISRA“) ]. Seller agrees to obtain approval of a Clean-Up Plan from the Department of Environmental Protection (“DEP“), post the necessary financial security for performance pursuant to ECRA, will implement the approved Clean-Up Plan and complete the detoxification of the Subject Premises in accordance with and to the approval of the DEP. Pending DEP approval of a Clean-Up Plan, Seller will attempt to obtain the consent of the DEP to the conveyance of the Subject Premises. “ECRA Approval” will be deemed to have taken place upon the receipt by Seller from the DEP of the approval of the implementation of the Clean-Up Plan and satisfactory detoxification of the Subject Premises or a consent from the DEP to convey the Subject Premises to Purchaser in the form of an Administrative Consent Order and bond securing the detoxification of the Subject Premises by Seller, all in a form and substance satisfactory to Purchaser‘s mortgage lender. In no event shall Purchaser be obligated under this Contract to assume any ECRA Clean-Up responsibilities. If ECRA Approval is not obtained prior to January 1, 1986, Purchaser shall have the continuing right to terminate this Contract by giving Seller notice at any time up to January 20, 1986. If ECRA Approval is not obtained by June 1, 1986, this Contract shall be automatically terminated and after the refund of the Deposit to Purchaser, neither party shall have anyrights or claims against the other arising out of this Contract.
App. at 93a-94a. Title to the Property closed on December 23, 1985, three days after the DEP conditionally approved the Clean-Up Plan, and on that day USLR assigned its rights in the Property to its present owner, appellant Black Horse.
As previously mentioned, at some point in 1988, appellee Dow purchased all of Essex‘s stock, and Essex became a wholly-owned subsidiary of Dow. Since that time, Dow employees have been involved in the remediation and detoxification of the Property, but these Dow employees have been acting as “consultants” to Essex in that connection. SA at 546, 549.
Essex began its soil remediation efforts shortly after it sold the Property in 1985. While we are not able to ascertain the exact date of completion from the record, appellants’ counsel confirmed at oral argument that soil remediation was finished within two years of the sale of the Property. See generally app. at 235a; SA at 536; appellees’ br. at 17. Essex commenced groundwater remediation in 1988, app. at 236a, but, to date, it has not completed that remediation. It is Essex‘s alleged failure to complete remediation and detoxification of the Property within a “reasonable time” that forms the crux of the parties’ dispute in this case.
One specific example that appellants cite as proof of Essex‘s alleged failure to remediate the Property within a reasonable time pertains to Essex‘s cleanup efforts with respect to certain “chlorinated volatile organic compounds” (“CVOCs“) found in the soil and groundwater in certain areas of the Property.2 In 1991, the DEP ordered Essex to perform a “temporary well point survey” to investigate the presence and source of CVOCs found in the groundwater and soil gas. See app. at 304a. After Essex conducted extensive investigations into the source and levels of CVOCs found in the soil gas and groundwater, Essex proposed to remediate the areas of the Property contaminated with CVOCs by means of soil vapor extraction (“SVE“) technology, specifically, a “dual phase extraction system.” App. at 307a. In May 1992, DEP approved this proposal. App. at 307a, 240a.
Notwithstanding DEP‘s approval of Essex‘s proposed system, Essex did not begin to install and operate the system immediately. Rather, from 1992 to 1997, Essex continued to investigate the source of the various CVOCs found on the Property, and conducted various tests at DEP‘s request. See app. at 238a-40a. This additional investigation required Essex to modify the SVE design, which requirement might account for the delay in its installation. App. at 240a. In any event, Essex completed its installation of the dual-phase extraction system in August 1997. We note, however, that Essex experienced some “start up” difficulties at the outset of its operation of the system. App. at 240a. Insofar as we can determine from the record, Essex is continuing its remediation efforts in connection with the CVOCs detected on the Property.
B. Procedural History
Appellants commenced this action in the district court in 1997, and filed an amended complaint shortly thereafter. The amended complaint sets forth five causes of action against appellees Essex and Dow:3 (1) a claim based on a breach of
The parties commenced discovery on November 7, 1997. Appellants designated Berger as their
IT IS on this 9th day of October, 1998, ORDERED, as follows:
1. Lawrence S. Berger, as Plaintiffs’
Fed.R.Civ.P. 30(b)(6) designated witness and fact witness, shall appear for oral deposition commencing on Tuesday, October 13, 1998, at 10:00 a.m. and continuing from day to day thereafter until completed.
App. at 657a.
Notwithstanding the court‘s directive, when appellees’ counsel appeared at Berger‘s law office to continue his deposition on October 13, 1998, Berger failed to appear and his counsel, Paul Schafhauser, was “in trial” and not in the office. SA at 60-61. At that point, appellees’ counsel again sought the court‘s intervention.
On October 15, 1998, the magistrate judge signed and entered an order which directed that Berger‘s deposition recommence on Monday, October 19, 1998, at 10:00 a.m. App. at 660a. The order also provided that “[a]s a sanction for failure by Lawrence Berger to appear for depositions on Tuesday, October 13, Plaintiffs shall promptly pay the fees and costs of counsel fees for defendants (a) for appearing at Mr. Berger‘s non-deposition on October 13, and (b) for bringing this application and appearance today.” App. at 660a. While Berger appeared for his deposition at the designated date and time, appellees claim that he provided evasive and non-responsive answers to many of counsel‘s questions relating to the negotiation and execution of the Agreement, and appellants’ damages allegations. See generally app. at 540a-655a.
After the completion of discovery, the parties filed several motions germane to
The magistrate judge granted appellees’ request for sanctions pursuant to
In the meantime, after hearing oral argument on the cross-motions for summary judgment on June 28, 1999, see app. at 806a 831a, the district court granted appellees’ motion on the amended complaint and denied appellants’ cross-motion on the counterclaim by letter opinion and order entered August 10, 1999. Addressing appellees’ motion first, the district court determined that dismissal of the amended complaint in its entirety was appropriate for several reasons, each of which we will discuss in greater detail in the discussion that follows.5
With respect to the breach of contract claim (count I), the court held that Paragraph 16 of the Agreement did not contain a provision requiring Essex to remediate the Property in a “reasonable time,” and, given the commercial context in which the parties negotiated and executed the Agreement and appellants’ subsequent conduct, the court should not imply that the contract had a reasonable time provision. See app. at 10a. Alternatively, it stated that even if it were to assume that there is an implicit “reasonable time” provision in Paragraph 16 of the Agreement, appellants failed to adduce any evidence from which a reasonable jury could conclude that 14 years, i.e., from 1985 to the date of the district court‘s decision, was an unreasonably long time period to complete the type of detoxification and remediation called for in the Clean-Up Plan. App. at 11a. Turning next to appellants’ claim based on the alleged breach of the implied covenant of good faith and fair dealing (count II), the court found that appellants failed to produce sufficient evidence that Essex acted in bad faith or engaged in misconduct that
Third, the court dismissed the CERCLA and Spill Act claims for damages on the ground that appellants could not demonstrate that they incurred any compensable costs under either statute. The court pointed out that the only costs that appellants allegedly incurred were the fees they paid to their consultant, Enviro-Sciences, Inc. (“ESI“), but that such fees were not compensable under either the CERCLA or the Spill Act. App. at 15a. The court also denied appellants’ request for injunctive and declaratory relief under CERCLA and the Spill Act, reasoning that declaratory relief was inappropriate because “plaintiffs have utterly failed to make any showing that they are likely to incur any future costs that will be recoverable” under either statute. It further found that injunctive relief was not warranted in view of the circumstance that Essex “is contractually and statutorily bound to detoxify the Property,” and there was no evidence that Essex had breached the contract or violated CERCLA or the Spill Act. App. at 15a-16a. Next, the court dismissed count V, stating that “because plaintiffs have failed to adduce sufficient evidence in support of their breach of contract claims, they cannot recover the damages outlined in Count Five of the Complaint.” App. at 16a.
Finally, the district court addressed and denied appellants’ cross-motion for summary judgment on the counterclaim, noting that appellants “cite no authority in support of their motion,” but “merely allege that ‘Plaintiffs do not and need not consent to any [engineering and institutional controls] with respect to the Property.‘” Ultimately the court found that “[o]n the present record, this Court is unable to say that the plaintiffs are entitled, as a matter of law, to a judgment dismissing defendants’ counterclaims.”6 App. at 17a. The court‘s order stated that appellants’ amended complaint was dismissed with prejudice.
After the district court ruled on the parties’ dispositive motions, on or about August 13, 1999, the district court ordered the parties to file cross-motions with respect to Essex‘s counterclaim. App. at 775a. On December 13, 1999, the district court heard oral argument on the cross-motions, and also considered appellants’ outstanding appeal from the magistrate judge‘s sanctions order. Ruling on the outstanding motions the district court (1) affirmed the magistrate judge‘s sanctions order, and (2) dismissed Essex‘s counterclaim against appellants without prejudice for lack of subject matter jurisdiction because the controversy set forth in the counterclaim was not ripe.7 See app. at 832a-49a. The district court then memorialized its record rulings in its “Final Order” entered December 16, 1999. App. at 23a. The monetary sanctions have been quantified and we understand that appellants have paid them.
Appellants filed a timely notice of appeal to this court from the district court‘s orders of August 10, 1999, and December 16, 1999. App. at 34a. The appellees do not cross-appeal from the dismissal of their counterclaim. We have jurisdiction pursuant to
III. DISCUSSION
As is evident from our recitation of the procedural history leading to this appeal, appellants challenge several of the district court‘s rulings made during the proceedings in this matter. First, we will address the court‘s August 10, 1999 order dismissing the amended complaint. Then, we will review the district court‘s December 16, 1999 order dismissing appellees’ counterclaim without prejudice, and affirming the magistrate judge‘s sanctions order.
A. District Court‘s Dismissal of the Amended Complaint
1. Breach of Contract Claim (Count I)
Appellants focus most of their attention on the district court‘s dismissal of their breach of contract claim pleaded in count I of the amended complaint. While recognizing that under New Jersey law, courts generally find that there is a “reasonable time” term implicit in contracts that do not set forth any time limitation for performance, the district court nevertheless held that “[i]n this case, the Court finds no justification for implying a ‘reasonable time’ for performance because such a term is not ‘necessary to give business efficacy to the contract as written.‘” App. at 8a. The court explained that “[a] main purpose of the Agreement, and the only purpose of Paragraph 16, was to require Essex to remediate the Property to the full satisfaction of the DEP and thereby make the land freely marketable.” App. at 8a. The court found that “‘a reasonable time’ limitation is not necessary because Essex‘s performance under the contract—obtaining final DEP approval—must be evaluated solely by reference to the DEP.” App. at 9a. Accordingly, the court stated that “such a contract simply does not lend itself to a reasonable time limitation.” Id.
It also dismissed the breach of contract claim on the alternative ground that appellants presented insufficient evidence from which a reasonable jury could conclude that Essex breached its obligation to perform remediation and obtain DEP approval pursuant to the Clean-Up Plan within a “reasonable time.” On this point, the district court held as follows:
Plaintiffs allege that Essex has breached its contractual obligation to complete the detoxification and obtain final DEP approval “within a reasonable time.” Therefore, to prevail, plaintiffs must show that a “reasonable time” has already expired. The Agreement was executed in 1985. This Court cannot say that fourteen years is unreasonable as a matter of law. In the context of an ISRA clean-up, which plaintiff Berger understood to be a “cumbersome” and “long” process, plaintiffs must adduce evidence that a “reasonable time” for completion of the clean-up is less then fourteen years....
Such evidence might be in the form of reprimands or other statements from regulatory agencies like the DEP. Plaintiffs might also carry their evidentiary burden with expert testimony that, under the circumstances of this site and comparing it to other sites, fourteen years is an unreasonable length of time. In this case, however, plaintiffs have simply failed to adduce any evidence that fourteen years is unreasonable. The only evidence that even remotely addresses this issue is contained in plaintiffs’ expert report....
Giving plaintiffs the best of Mr. Cohen‘s report, “the environmental program undertaken on this site has been slow and ineffective in treating the contaminants that were release by Essex Chemical.” But evidence of a slow and ineffective clean-up process, without more, cannot reasonably support an in-
ference that fourteen years is unreasonable.
App. at 11a-12a.
Appellants contend that the court erred in dismissing their breach of contract claim because, notwithstanding the absence in Paragraph 16 of the Agreement of an explicit date by which Essex was to complete its cleanup of the Property and obtain DEP approval, by implication the Agreement requires Essex to fulfill its contractual obligations within a reasonable time. Appellants rely on the well-established principle of New Jersey law, which is applicable here on the contractual issues, that “‘[w]here no time is fixed for the performance of a contract, by implication a reasonable time was intended.‘” Br. at 41 (quoting, inter alia, Becker v. Sunrise at Elkridge, 226 N.J.Super. 119, 543 A.2d 977, 983 (App.Div.1988)). They claim that the district court erred in concluding that the nature of this particular contract, and Essex‘s obligation with respect to the remediation of the Property, rendered a “reasonable time” limitation unreasonable in the circumstances. Alternatively, they assert that at a minimum, there was a genuine issue of material fact as to whether the parties intended that Essex complete its remediation obligations within a reasonable time, thus precluding summary judgment in appellees’ favor. Second, appellants contend that contrary to the district court‘s finding, they presented sufficient evidence from which a reasonable jury could conclude that Essex failed to remediate the Property within a “reasonable time.”
Appellees respond that the district court correctly dismissed the breach of contract claim because appellants base their argument on the incorrect premise that Paragraph 16 omits a contractual provision which in turn requires the court to supply a “reasonable time” limitation. Br. at 36. They claim that contrary to appellants’ construction of the contract, Paragraph 16 does contain a definite term for completion of the Property‘s remediation and therefore does not omit a contractual provision. In appellees’ view the contract unambiguously provides the only term for completion that is reasonable in the circumstances—namely, that Essex‘s obligation is satisfied if the detoxification is undertaken “in accordance with and to the approval of DEP.” Br. at 35-36. They claim that the district court correctly determined that it would be unreasonable to find that the Agreement included an implied reasonable time limitation, given the commercial context of the sale and purchase.
Appellees further assert that, in any event, even if we agreed with appellants that the district court should have implied a “reasonable time” limitation on Essex‘s remediation obligations pursuant to Paragraph 16, summary judgment was appropriate because there is no evidence that Essex breached its contractual obligations in that connection. They claim that the district court correctly determined that appellants failed to meet their burden of producing evidence demonstrating that as of the date that appellants filed their complaint in the district court, Essex had failed to remediate and detoxify the Property in accordance with the Clean-Up Plan, and obtain DEP approval of its efforts, within a reasonable time.
Appellees’ protestations notwithstanding, we reject the district court‘s conclusion that a reasonable time provision was not implicit in Paragraph 16 of the Agreement. After all, New Jersey courts uniformly have applied the principle that “where no time is fixed for the performance of a contract, by implication a reasonable time was intended.” See Becker, 543 A.2d at 983 (contract for sale of real property); see also, e.g., River Dev. Corp. v. Liberty Corp., 29 N.J. 239, 148 A.2d 721, 722 (1959) (license to reclaim land must be exercised within a reasonable time); Ridge Chevrolet Oldsmobile, Inc. v. Scarano, 238 N.J.Super. 149, 569 A.2d 296, 300 (App. Div.1990) (performance under real estate contract); Mazzeo v. Kartman, 234 N.J.Super. 223, 560 A.2d 733, 737 (App. Div.1989) (“If the trial judge cannot determine the parties’ actual intent [concerning the temporal limits of a right of first refusal], he should determine a ‘reasonable time’ for the expiration of the right.“); Ocean Cape Hotel Corp. v. Masefield Corp., 63 N.J.Super. 369, 164 A.2d 607, 614 (App.Div.1960) (where plaintiff claimed that defendant was obligated to make certain repairs to property, if plaintiff‘s claim had been based on breach of contract, the court would have implied a term that required completion of performance within a reasonable time and would not have permitted parol evidence that defendant promised repairs as of a certain fixed date); McGraw v. Johnson, 42 N.J.Super. 267, 126 A.2d 203, 206 (App.Div.1956) (noting that performance under contract must be completed within reasonable time where claim was based on contractor‘s alleged failure to complete building of home within a reasonable time); Curtis Elevator Co. v. Hampshire House, Inc., 142 N.J.Super. 537, 362 A.2d 73, 76 (Law Div.1976) (performance under contract to install elevators; where no specific date for completion was provided in contract, court implied term requiring completion within a reasonable time).
The district court predicated its analysis on statements in New Jersey cases to the effect that terms are implied to “give business efficacy to the contract as written.” See app. at 8a (citing McGarry v. Saint Anthony of Padua Roman Catholic Church, 307 N.J.Super. 525, 704 A.2d 1353, 1357 (App.Div.1998)). But appellants argue persuasively that it would be commercially unreasonable to construe the terms of Paragraph 16 so as to permit Essex to begin its cleanup at its leisure, and to continue its efforts in perpetuity without the threat or even the slightest possibility of adverse legal consequences flowing from inordinate delay. We also doubt that the parties could have intended such a bizarre result. See Onderdonk v. The Presbyterian Homes of N.J., 85 N.J. 171, 425 A.2d 1057, 1063 (1981) (“Central to this inquiry of ascertaining what, if any, terms are implied is the intent of the parties. Intent may be determined by examination of the contract and in particular the setting in which it was executed.“).
Nevertheless, notwithstanding our holding that a “reasonable time” term is implicit is Paragraph 16 of the Agreement, we agree with the district court‘s alternative basis for dismissing appellants’ breach of contract claim, i.e., that a reasonable time period has not expired.8 We are mindful that “[w]hat constitutes a reasonable time under New Jersey law ‘is usually an implication of fact, and not of law, derivable from the language used by the parties considered in the context of the subject matter and the attendant circumstances, in aid of the apparent intention.‘” Mazzeo, 560 A.2d at 737 (quoting Borough of West Caldwell v. Borough of Caldwell, 26 N.J. 9, 138 A.2d 402, 412 (1958)). Nevertheless, appellants would bear the burden of proof on this issue at trial, to show that a reasonable time has expired, and to survive summary judgment, they must adduce evidence from which a reasonable jury could conclude that Essex breached its contractual obligation to complete its remediation and detoxification efforts within a reasonable time. Here, even viewing the facts in the light most favorable to appellants, we agree with the district court‘s assessment of the weakness of appellants’ evidence as well as the court‘s conclusion that appellants failed to demonstrate that there was a genuine issue of material fact on the issue of whether Essex had breached its obligation to remediate the Property and obtain DEP approval
For example, appellants first point to an Essex “Expense Appropriation Request” which indicated that the “completion date” of the entire project would be “1987.”9 App. at 777a. But we do not share appellants’ view that this evidence can support a conclusion that Essex breached Paragraph 16 of the Agreement. Obviously, the fact that Essex estimated its completion date incorrectly does not support the conclusion that it has failed to cleanup the Property within a reasonable time. While a party‘s advance estimate of the time to complete a project might be persuasive evidence of the reasonable time for that undertaking, it is not in the circumstances here in which the scope of the project was so uncertain.
Appellants also rely on the fact that in March 1986, shortly after the DEP approved Essex‘s Clean-Up Plan, Dr. Calvin J. Benning (“Benning“), Director of Environmental Affairs for Essex, wrote to the DEP questioning whether certain of the standards set forth in the Clean-Up Plan with respect to the contemplated soil remediation and whether the Clean-Up Plan‘s requirements were reasonable in the circumstances. App. at 225a-26a. For convenience, we will refer to this correspondence as Essex‘s “March 1986 letter.” Appellants claim that the March 1986 letter was Essex‘s “attempt[] to circumvent the parameters and conditions” of its Clean-Up Plan, and that it demonstrates that Essex failed to proceed “reasonably and diligently” with the Property‘s detoxification. Br. at 46.
We cannot agree. The March 1986 letter questions the cleanup levels relating to the soil remediation which Essex completed within two years of the sale of the Property. See generally app. at 235a; appellees’ br. at 17. Certainly if Essex also had completed the groundwater remediation within that period appellants would not have instituted litigation alleging a breach of Paragraph 16. Thus, inasmuch as appellants’ breach of contract claim essentially is predicated on Essex‘s failure to complete groundwater remediation, we fail to see how this letter supports appellants’ argument.
Similarly, appellants cite the fact that Essex did not begin groundwater remediation efforts until 1988 or remediation of the CVOCs until 1997. See br. at 47-48. However, appellants do not present evidence indicating that the delays were avoidable, and in any event, were unreasonable. Also they rely on the circumstance that groundwater pumping “was frequently interrupted throughout the years,” br. at 47, and that the DEP gave Essex a rating of “unacceptable due to failure to operate the groundwater remediation system in the capacity it was designed.” App. at 298a (emphasis added). But a review of the evidence in the record confirms that the interruptions Essex experienced are not a basis for holding that it unreasonably delayed its performance under Paragraph 16. To the contrary, intermittent delays are to be expected on a remediation project which cannot be compared to an ordinary construction project built in accordance with fixed plans which is thus far less likely to encounter problems than a remediation undertaking. Moreover, as appellees correctly point out, the DEP‘s “unacceptable” rating did not relate to the length of time that Essex had expended on the remediation and detoxifi-
As the district court correctly observed, app. at 11a-12a, appellants’ strongest evidence on this score is a statement by their environmental consultant, Irving Cohen of ESI. Cohen issued a report in which he opined that “the environmental program undertaken on this site has been slow and ineffective in treating the contaminants that were released by Essex Chemical.” App. at 418a. In our view, however, this statement does not create a factual issue for the jury on the issue of unreasonable delay. Importantly, Cohen stops short of stating definitively that, given the circumstances, Essex had taken too long to complete its remediation and detoxification efforts. Moreover, even if he had stated such a conclusion it would not have an adequate foundation as he does not analyze specifically the types of contaminants involved in this project and the circumstances surrounding the remediation of this site. Nor does he compare Essex‘s efforts to other sites plagued with similar environmental contaminants. Given the vague nature of Cohen‘s conclusion, we agree with the district court‘s observation that “evidence of a slow and ineffective cleanup process, without more, cannot reasonably support an inference that fourteen years is unreasonable.” App. at 12a.
When boiled down to its essence, appellants’ argument is that because the cleanup of the Property has taken longer to finish than the parties originally anticipated, Essex has breached Paragraph 16 of the Agreement as it has not completed the cleanup within a “reasonable time.” While it may be unfortunate that it has taken Essex an extended period of time to complete the cleanup of this Property, the delay does not support a conclusion that the amount of time it already has spent is unreasonable given the nature of Essex‘s contractual obligation. By appellants’ own admission, the remediation and detoxification of the Property is a large effort which, by its very nature, is a lengthy and time-consuming process. Given the realities of the situation, appellants simply have failed to point to any evidence in this record demonstrating that the length of time that Essex has taken to detoxify the Property and obtain DEP approval is unreasonable in the circumstances. Accordingly, we will affirm the district court‘s dismissal the breach of contract claim.
2. Breach of the Implied Duty of Good Faith and Fair Dealing (Count II)
The district court also dismissed appellants’ claim based on Essex‘s alleged breach of the implied duty of good faith and fair dealing, reasoning:
In this case, plaintiffs allege only that Essex has failed to complete the clean-up process and obtain final DEP approval within a reasonable time. They point to no acts or omissions done in bad faith. There is no allegation, and certainly no evidence, that Essex has committed any misconduct. Summary judgment is therefore appropriate.
App. at 13a. Appellants claim that the district court erred in granting summary judgment on this claim because it ignored evidence from which a reasonable jury could conclude that Essex breached the implied duty of good faith and fair dealing during the course of its cleanup of the Property. Appellants point to the following evidence in support of their claim: (1) documents confirming that appellees “attempted to renege upon the standards set forth in the Clean-Up Plan“; (2) evidence showing that appellees “inexplicably failed to even begin remediation for many years after delineating contamination on the Property“; and (3) DEP documents repri-
To be sure, “every contract in New Jersey contains an implied covenant of good faith and fair dealing.” Sons of Thunder, Inc. v. Borden, Inc., 148 N.J. 396, 690 A.2d 575, 587 (1997); see also Restatement (Second) of Contracts § 205 (1981) (“Every contract imposes upon each party a duty of good faith and fair dealing in its performance and its enforcement.“). “The implied covenant is an independent duty and may be breached even where there is no breach of the contract‘s express terms.” Emerson Radio Corp. v. Orion Sales, Inc., 80 F.Supp.2d 307, 311 (D.N.J. 2000) (citing, inter alia, Sons of Thunder, 690 A.2d at 575); see also Bak-A-Lum Corp. v. Alcoa Bldg. Prods., Inc., 69 N.J. 123, 351 A.2d 349, 352 (1976).
The implied covenant of good faith and fair dealing requires that “neither party shall do anything which will have the effect of destroying or injuring the right of the other party to receive the fruits of the contract.” Sons of Thunder, 690 A.2d at 587 (internal quotation marks omitted); Palisades Properties, Inc. v. Brunetti, 44 N.J. 117, 207 A.2d 522, 531 (1965). A party to a contract breaches the covenant if it acts in bad faith or engages in some other form of inequitable conduct in the performance of a contractual obligation. See, e.g., Sons of Thunder, 690 A.2d at 589 (distinguishing prior decision in Karl‘s Sales & Service, Inc. v. Gimbel Bros. Inc., 249 N.J.Super. 487, 592 A.2d 647 (App.Div.1991), in which “there were no allegations of bad faith or dishonesty on the part of the terminating party” to the contract); Association Group Life, Inc. v. Catholic War Veterans, 61 N.J. 150, 293 A.2d 382, 384 (1972) (stating that a contracting party breaches duty of good faith and fair dealing by engaging in behavior that was “not contemplated by the spirit of the contract and fell short of fair dealing“); Emerson Radio Corp., 80 F.Supp.2d at 311 (“The Restatement and the [New Jersey] cases note a state of mind or malice-like element to breach of good faith and fair dealing, holding that the duty excludes activity that is unfair, not decent or reasonable, nor dishonest.“); Kapossy v. McGraw-Hill, Inc., 921 F.Supp. 234, 248 (D.N.J.1996) (noting that courts “imply a covenant of good faith and fair dealing in order to protect one party to a contract from the other party‘s bad faith misconduct or collusion with third parties where there is no breach of the express terms of the contract“); see also Restatement (Second) of Contracts § 205 cmt. a (noting that “[t]he phrase ‘good faith’ is used in a variety of contexts, and its meaning varies somewhat with the context” and explaining that “[g]ood faith performance or enforcement of a contract emphasizes faithfulness to an agreed common purpose and consistency with the justified expectations of the other party; it excludes a variety of types of conduct characterized as involving ‘bad faith’ because they violate community standards of decency, fairness or reasonableness.“).10
Section 205 of the Restatement (Second) of Contracts provides examples of the types of behavior that can give rise to a claim for breach of the implied duty of good faith and fair dealing in the context of one‘s performance under a contract:
Subterfuges and evasions violate the obligation of good faith in performance even though the actor believes his conduct to be justified. But the obligation goes further: bad faith may be overt or may consist of inaction, and fair dealing may require more than honesty. A
complete catalogue of types of bad faith is impossible, but the following types are among those which have been recognized in judicial decisions: evasion of the spirit of the bargain, lack of diligence and slacking off, willful rendering of imperfect performance, abuse of power to specify terms, and interference with or failure to cooperate in the other party‘s performance.
Id. § 205 cmt. d (emphasis added).
Appellants’ basic contention is that the circumstances of this case demonstrate that there is a genuine issue of material fact concerning Essex‘s lack of good faith in its performance of its obligation to remediate the Property and obtain DEP in accordance with Paragraph 16 of the Agreement. They claim that since the DEP approved the Clean-Up Plan in 1985, Essex has not performed its cleanup in a diligent manner, and in fact, has engaged in bad faith conduct purposely to protract the process. According to appellants, Essex‘s conduct has precluded them from obtaining the fruits of their contract, i.e., a property that is not environmentally distressed.
We cannot agree that the evidence in this case supports the existence of a genuine issue of material fact on the issue of Essex‘s good faith in its performance of its obligation to remediate and detoxify the Property. In reality, appellants’ argument rests exclusively on their subjective interpretation of the March 1986 letter in which Benning set forth the following reservations as to whether certain aspects of the Clean-Up Plan were reasonable in the circumstances:
The clean-up plan calls for the excavation and disposal of the contaminated soil to a level of 1 ppm, based on the requirements of the case manager at BISE. I believe these levels are extremely low and not warranted.... We fully intend to remove the contaminated dirt from the former tank farm area.... However to satisfy BISE we are required to perform 15 separate sample analyses in the laboratory instead of using a portable field analyzer to determine the extent of pollution and excavation, and to excavate to 1 ppm residual total VOC in the soil. I believe these requirements are both unreasonable and unwarranted. The clean up plan had to be approved by the end of 1985 and time was not available to question the requirement or to rationally discuss these points. However, the IAG discussion [which Benning attended on March 18, 1986] indicate [sic] that the [DEP] has also been rethinking some of their procedures and actions. I believe hexane and heptane are classified as hydrocarbon and I believe that a higher level than 1 ppm is perfectly justified.
App. at 225a-26a. Appellants claim that this letter exhibits Essex‘s lack of good faith and confirms that Essex attempted to “renege upon the standards set forth in the Cleanup Plan.” Br. at 49; reply br. at 22-23.
While the letter questions whether the cleanup level of 1 ppm is warranted and whether lab analysis of soil samples is necessary as opposed to Essex merely conducting field measurements of the soil, the letter does not demonstrate a lack of good faith on Essex‘s part in performing its obligations pursuant to Paragraph 16 of the Agreement. First, as we previously mentioned, the letter discusses Essex‘s obligations under the Clean-Up Plan relating to soil remediation, but appellants do not dispute that Essex has completed its soil remediation and detoxification efforts. In fact, appellants confirmed that Essex began its cleanup of the soil shortly after the sale, and that it completed soil remediation sometime within two years. Thus, we fail to see how this letter can demonstrate Essex‘s lack of diligence in that regard, or how Essex‘s conduct in questioning certain aspects of the Clean-Up Plan compromised appellants’ right “to receive the fruits of the contract.” See Sons of Thunder, 690 A.2d at 587 (internal quotation marks omitted).
In any event, Benning‘s concern over certain aspects of the Clean-Up Plan is of no consequence when we consider that less than two months later, he wrote a memorandum to Essex officials in which he recognized and re-emphasized Essex‘s obligation to adhere to the requirements set forth in Clean-Up Plan. The memorandum states:
Lately we have received letters from NJDEP and have discussed our program and permit applications with both state and local officials. These discussions have led to some very specific program requirements and items we must “keep in mind.”
For example:
1. The NJDEP‘S ECRA office and the department of solid waste management have made it very clear that we must adhere to the Clean-Up Plan.
App. at 227a.
Simply put, the fact that Benning questioned certain aspects of the Clean-Up Plan is not evidence that Essex acted in bad faith, as the DEP obviously responded to Benning‘s concerns by indicating that Essex was obligated to remediate the Property in accordance with the Clean-Up Plan, and Benning expressly reaffirmed Essex‘s intent to comply with its contractual and statutory obligations in that regard. Moreover, appellants do not demonstrate that Essex ever failed to implement a substantive remediation measure that the DEP required in connection with Essex‘s cleanup of the Property, and do not dispute that Essex completed soil remediation on the Property within two years of the sale. In our view, Benning‘s May 1986 memorandum reaffirming Essex‘s commitment to remediate the Property in accordance with the Clean-Up Plan belies appellants’ assertion that the March 1986 letter evidences Essex‘s intent from the outset to conduct its remediation and detoxification efforts in “bad faith.” Reply br. at 23. In the circumstances, we will affirm the district court‘s dismissal of appellants’ claim that Essex breached the duty of good faith and fair dealing.
3. Appellants’ CERCLA Claim (Count III) and Spill Act Claim (Count IV)
Count III of the amended complaint asserts a claim for damages and injunctive and declaratory relief pursuant to CERCLA, and count IV seeks the same relief pursuant to the Spill Act. As previously mentioned, the district court dismissed the CERCLA claim, reasoning that appellants had not incurred any compensable “necessary costs of response” pursuant to section 107(a)(4)(B) of CERCLA. See
The district court also denied appellants’ request for a declaration that Essex is liable to appellants for any future costs pursuant to CERCLA or the Spill Act. The court stated that “[p]laintiffs have utterly failed to make any showing that they are likely to incur any future costs that will be recoverable under CERCLA or the Spill Act. Indeed, it is undisputed that Essex is contractually obligated to remediate the Property at its own expense.” App. at 15a. Inasmuch as there was “no evidence—or even an allegation—that the plaintiffs intend to participate in future clean-up activities or incur any costs that might be recoverable under CERCLA,” the court concluded that granting declaratory relief would be inappropriate.
Finally, the court denied appellants’ request for an injunction compelling Essex to commence and complete the cleanup on the basis that there was no present case or controversy. The court reasoned that “[t]here is no dispute that Essex is under both a contractual and statutory duty to detoxify the Property; nor is there any dispute that Essex has worked continuously to remediate the Property.” The court further explained that “[i]n the absence of evidence that Essex has breached the Agreement or violated CERCLA or IRSA, there is no basis for the injunction that plaintiffs seek.” App. at 16a.
On appeal from the CERCLA and Spill Act dispositions, appellants primarily claim that the district court erred in dismissing their CERCLA claim for monetary relief.11 While appellants have
Appellants’ argument thus raises the issue of whether ESI‘s fees are “necessary costs of response” for which appellants, as private parties, may recover in a suit pursuant to section 107(a)(4)(B) against Essex, the party indisputably responsible for the cleanup of the Property pursuant to the Clean-Up Plan approved by the DEP. To answer that question, we must ascertain the character of the costs in question, and determine whether they fall within the types of costs recoverable by an innocent party pursuant to section 107(a)(4)(B) of CERCLA.
We begin with the relevant statutory language. Section 107 of CERCLA,
(23) The terms “remove” or “removal” means[sic] the cleanup or removal of released hazardous substances from the environment, such actions as may be necessary taken in the event of the threat of release of hazardous substances into the environment, such actions as may be necessary to monitor, assess, and evaluate the release or threat of release of hazardous substances, the disposal of removed material, or the taking of such other actions as may be necessary to prevent, minimize, or mitigate damage to the public health or welfare or to the environment, which may otherwise result from a release or threat of release. The term includes, in addition, without being limited to, security fencing or other measures to limit access, provision of alternative water supplies, temporary evacuation and housing of threatened individuals not otherwise provided for, action taken under section 9604(b) of this title, and any emergency assistance which may be provided under the Disaster Relief and Emergency Assistance Act....
(24) The terms “remedy” or “remedial action” means [sic] those actions consistent with permanent remedy taken instead of or in addition to removal actions in the event of a release or threatened release of a hazardous substance into the environment, to prevent or minimize the release of hazardous substances so that they do not migrate to cause substantial danger to present or future public health or welfare or the environment. The term includes, but is not limited to, such actions at the location of the release as storage, confinement, perimeter protection using dikes, trenches, or ditches, clay cover, neutralization, cleanup of released hazardous substances and associated contaminated materials, recycling or reuse, diversion, destruction, segregation of reactive wastes, dredging or excavations, repair or replacement of leaking containers, collection of leachate and runoff, onsite treatment or incineration, provision of alternative water supplies, and any monitoring reasonably required to assure that such actions protect the public health and welfare and the environment. The term includes the costs of permanent relocation of residents and businesses and community facilities where the President determines that, alone or in combination with other measures, such relocation is more cost-effective than and environmentally preferable to the transportation, storage, treatment, destruction, or secure disposition offsite of hazardous substances, or may otherwise be necessary to protect the public health or welfare; the term includes offsite transport and offsite storage, treatment, destruction, or secure disposition of hazardous substances and associated contaminated materials.
As we explained in United States v. Rohm and Haas Co., “[i]n general, removal actions are short term responses to a release or threat of release while remedial actions involve long term remedies.” 2 F.3d at 1271. Here, while appellants fail to recognize explicitly the distinction between “removal” and “remedial” actions and do not attempt to place ESI‘s consultant fees in either category, given the character of the costs at issue we believe that if the activities involved here are included within the definition of “response costs,” it is because they are “removal” rather than “remedial” actions. Cf. id. (noting that the parties agreed that if the government‘s oversight activities were deemed “necessary costs of response,” it would be because they were removal actions rather than remedial actions).
Nevertheless, based on our study of the record, exercising plenary review we conclude that the district court did not err in concluding that ESI‘s consulting fees for which appellants seek reimbursement were litigation-related expenses. Inasmuch as private parties may not recoup litigation-related expenses in an action to recover response costs pursuant to section 107(a)(4)(B) of CERCLA, see Key Tronic Corp. v. United States, 511 U.S. 809, 819-20, 114 S.Ct. 1960, 1967, 128 L.Ed.2d 797 (1994); Redland Soccer Club, Inc. v. Department of the Army, 55 F.3d 827, 850 (3d Cir.1995), and appellants do not claim to have incurred any other costs which fall within the definition of “necessary costs of response,” we agree with the district court‘s disposition of the CERCLA claim.
In Redland Soccer Club, we determined that the Redland plaintiffs’ litigation costs, which included attorney‘s fees, health risk assessments and expert witness fees, were not “response costs” under any of the statutory definitions found in section 9601 of CERCLA. 55 F.3d at 849-50 & n. 12 (citing, inter alia, Key Tronic Corp., 511 U.S. at 819, 114 S.Ct. at 1967, which held that litigation-related attorney‘s fees were not recoverable in a private response cost recovery action). In reaching our result, we first observed that “under section [107], plaintiffs may only recover response costs which are necessary and consistent with the [National Contingency Plan].” Id. at 850. Second, we found that “[t]he heart of these definitions of removal and remedy are ‘directed at containing and cleaning up hazardous releases.’ ... [T]herefore[,] ‘necessary costs of response’ must be necessary to the containment and cleanup of hazardous releases.” Id. (quoting United States v. Hardage, 982 F.2d 1436, 1448 (10th Cir.1992) (alteration in original) (internal quotation marks omitted)). Given that the costs incurred were all litigation-related expenses unrelated to any remedial or response action at the property itself, we stated that “we do not believe the district court erred in determining that plaintiffs’ costs are not response costs because they are not ‘monies ... expended to clean up sites or to prevent further releases of hazardous chemicals.‘” Id. (quoting Redland Soccer Club, Inc. v. Department of Army, 801 F.Supp. 1432, 1435 (M.D.Pa.1992), aff‘d in relevant part, 55 F.3d 827 (3d Cir.1995)).
Here, as in Redland, the record required the district court to reach its conclusion that the costs for which the parties involved were seeking reimbursement were litigation-related expenses, and thus do not fall within the definition of “necessary costs of response.” We first point out that, notwithstanding appellants’ use of ESI‘s services prior to the commencement of this litigation, the billing statements that appellants submitted as proof of the amounts expended for ESI‘s service were for “consulting fees.” Importantly, the billing statements cover services that ESI rendered in connection with the Property intermittently from November 1996 to May 1998. See SA at 1-17. Obviously, inasmuch as appellants filed their complaint in the district court in March 1997, appellants are seeking reimbursement for consulting services rendered just prior to the time that they commenced this litigation, as well as reimbursement for services during the duration of the proceedings in
In this connection, we find it significant that Cohen prepared an expert report for purposes of this litigation on behalf of ESI for appellants dated April 28, 1998, see app. at 412a, and that ESI correspondingly recorded a significant charge on its billing statement to USLR for that billing period. See SA at 13. The only reasonable inference we can draw from these circumstances is that the “consulting fee” that appellants paid to ESI for that time period represented, at least in significant part, ESI‘s payment for its preparation of the expert report.
Second, we note that the record reflects, and it is not disputed, that as appellants’ environmental consultant, ESI‘s responsibilities were limited to reviewing Essex‘s quarterly reports it submitted to the DEP, and to providing appellants with a summary or analysis of Essex‘s progress in completing its remediation and detoxification efforts in accordance with the approved Clean-Up Plan. See app. at 466a; see also SA at 527. Indeed, ESI was not involved in Essex‘s cleanup effort; it neither performed an investigation of the Property nor gathered data for that purpose. In our view, the nature of Essex‘s responsibilities toward its clients as described in the record thus confirms that it was retained to assess, for litigation purposes, whether Essex was complying with its contractual responsibility to cleanup the Property pursuant to the requirements set out in the Clean-Up Plan.
Moreover, it is relevant to our analysis that Berger‘s deposition testimony, as appellants’ designated
Q: [Referring to the invoices for ESI] Mr. Berger, have you ever seen those bills before?
A. I have no idea.
Q. Well, then look through them.
A. I could look through them for the next five hours and I would have no idea. We‘ve 30 properties. I get bills from people. There are bills going into 1997 and before. I have no idea whether I have ever seen these bills or any other bills you might put in front of me today.
Q. Mr. Berger, other than the charges represented in those bills, are there any other costs that have been expended by any plaintiff for any environmental consulting or removal or remediation with respect to the Black Horse Lane property?
A. I have no idea.
Q. Do you know a man named Mr. Irving Cohen?
A. Yes.
Q. How long have you known him?
A. I would say about ten years.
Q. And in what capacity do you know him?
A. Mr. Cohen was the president of Enviro Sciences. It‘s an environmental consulting firm.
Q. Has that firm ever used by [appellant] Black Horse Lane Associates?
A. I have no idea.
Q. Looking through the exhibits, if you could, could you tell me whether those bills appear to indicate that such was the case?
A. These bills are—at least the ones that I can see here—are from Enviro Sciences, Inc. They reference Essex Chem, and I will tell you that every one references Essex Chem, except for those that reference Black Horse Lane, which is the subject property of this lawsuit. Other than that, I can‘t tell you anything about these bills. All I‘m doing is reading from the bills for you.
Q. Turn to the bills that talk about Black Horse Lane, Phase One, I believe.
A. There‘s a bill dated 10-16-97 that says ‘Phase One, Black Horse Lane.’
Q. All right. To what does that bill refer?
A. I don‘t understand the question.
Q. What does Phase One, Black Horse Lane refer to?
A. I have no idea.
Q. Did you ever order a Phase One on Black Horse Lane?
A. I have no idea.
Q. Do you have an understanding what the phrase ‘Phase One’ means?
A. Yes, I do.
Q. What is that?
A. It‘s a preliminary environmental report which basically points out areas of potential environmental concern.
Q. Does it include any invasive testing, as far as you know?
A. Typically, no.
Q. Do you have any idea why Black Horse Lane would have ordered a Phase One at or about the time period for which the bill is indicated?
A. Sitting here today, I have no idea why we did or didn‘t. I suspect if we did, in fact, order one a year ago, at that point I had a reason for it, but I don‘t know what that reason would be sitting here today. If, in fact, we did order a Phase One, I don‘t recall that either.
App. at 544a. Our review of the remainder of Berger‘s deposition testimony regarding the nature of ESI‘s consulting work for appellants confirms that he failed to offer any useful information concerning the factual basis for appellants’ CERCLA response cost claim relating to the fees paid for ESI‘s services. See generally app. at 544a-49a.
Given the totality of the information in the record, we agree with the district court‘s assessment of the nature of ESI‘s consulting responsibilities to its client during the time period for which appellants seek reimbursement. We believe that the record requires the conclusion that ESI‘s work was designed to assess, for potential or actual litigation purposes, the extent of Essex‘s remediation efforts and its progress in that regard. Accordingly, ESI‘s consulting fees charged in connection with its services are not “response costs” that are recoverable in a private cost recovery suit pursuant to
Second, inasmuch as ESI‘s role was limited to reviewing the manner in which Essex was performing its legal obligation to remediate the Property and reporting Essex‘s progress to appellants, we think it fair to characterize ESI as an “overseer” of Essex‘s progress on behalf of appellants. But our decision in Rohm & Haas precludes appellants from recovering such “oversight” costs as “response costs” pursuant to
In reaching our conclusion, we looked to the definition of “removal” found in
Examined in a vacuum, this language could be understood to encompass at least some oversight of the activities of a private party, particularly private activities focusing on assessment of the risk.
On the other hand, it is at least as plausible to read this language as referring only to actual monitoring of a release or threat of release rather than oversight of the monitoring and assessment activities of others. This latter reading would be consistent with an understanding of the definition that distinguishes at all stages—assessment, response formulation, and execution—between actions taken to define the scope of the risk created by a release or threatened release and actions taken to evaluate the performance of others to determine whether they are meeting their legal obligations. We believe a reading of the statutory definition that embraces this distinction is linguistically the more plausible one.
Id. at 1275-76. We further concluded that “[a]ll things considered, we cannot say that clause [3] of the removal definition is sufficient to constitute the clear statement of intent required by [National Cable Television Ass‘n, Inc. v. United States, 415 U.S. 336, 342, 94 S.Ct. 1146, 1149-50, 39 L.Ed.2d 370 (1974) (“NCTA“)].”13 Id. at 1276.
Our interpretation of the removal definition as excluding the sort of “oversight” costs that the EPA sought in Rohm & Haas compels the conclusion that appellants cannot recover the funds paid to ESI for its consultant work, even though appellants are private entities rather than a governmental agency. As in Rohm & Haas, appellants seek reimbursement from Essex, the responsible party, for costs appellants incurred in monitoring the responsible party‘s compliance with its legal obligations. See Rohm & Haas, 2 F.3d at 1279 n. 23 (“The oversight costs here held to be non-recoverable are incurred at a different level of supervision. They are the costs of overseeing the performance of the entity that has assumed responsibility for the cleanup.“). Indeed, there is no dispute in this case that Essex is bound contractually to complete remediation and detoxification of the Property, and that appellants have not assisted Essex in meeting its statutory and contractual obligations. In this sense, then, the district court was correct in its observation that the costs for which appellants seek reimbursement were not incurred as a result of appellants’ actions in cleaning up the Property.
Obviously then, inasmuch as our holding in Rohm & Haas precludes the EPA from seeking reimbursement for “oversight” costs incurred in overseeing the performance of a private entity where a private party has assumed responsibility for the cleanup, an analysis of the scope of the “removal” definition necessarily requires us to reach the same result in a situation where a private party seeks reimbursement for overseeing another private party‘s legal obligation to cleanup a property. In short, we are satisfied that Congress did not intend
In sum, we are convinced that the district court correctly determined that appellants could not recover, pursuant to
B. District Court‘s Final Order of December 16, 1999
Appellants next contend that the district court erred in affirming the magistrate judge‘s letter opinion and order entered June 30, 1999, which granted appellees’ motion for discovery sanctions against appellants pursuant to
Here, Berger was not completely prepared on any occasion for which he sat for a deposition. Further, his lack of preparation cannot be a mere oversight but is, instead, a clear demonstration of bad faith. This is obvious from Berger‘s repeated denial of any knowledge of his status as a 30(b)(6) witness despite being present at the deposition and being asked each and every time he appeared if he had knowledge of his status. Further, Berger, as did the plaintiffs’ witness in Resolution Trust Corp., even denied knowledge of documents which he himself had signed, claiming that he had no recollection of such documents despite acknowledging that he normally did not sign anything that he did not read first. These infractions would not be so detrimental if Berger were not so consistent with his apparent incompetence and lack of cooperation. Had he taken the time to prepare in the slightest as Rule 30(b)(6) requires, he might have been fully prepared for at least one deposition. Additionally, Berger‘s actions are magnified by his status as a member of the Bar.
App. at 21a.
In affirming the magistrate judge‘s order, the district court provided its reasons on the record:
I read the record. It is appalling. It is appalling.
[Berger] did nothing except show his face only under the threat of court orders. When he showed up, he knew he was a 30(b)(6) witness and, notwithstanding the fact that he knew he was a 30(b)(6) witness, he refused to answer questions in an intelligent way. He refused to prepare, as you are required to prepare under 30(b)(6), to intelligently answer questions and just literally thumbed his nose at the defendants and, frankly, at the Court.
I‘m satisfied, based upon my review of the record—and I defy anyone to look at the record here which was created by Mr. Berger—that the actions taken by [the magistrate judge] were well within his discretion and do not constitute either an abuse of discretion or are they contrary to law or shocking to the conscience of the Court.
One, in order to come to that conclusion, one must live in the shoes of [the magistrate judge] in trying to conduct orderly discovery in this matter.
One must review meticulously the record of noncompliance by Mr. Berger in this matter.
[The magistrate judge] did not issue this opinion lightly. [The magistrate judge] was fully cognizant of the totality of the facts surrounding this matter, which border upon almost conscious disregard of the Court and the court rules....
Affirmed.
App. at 836a, 843a-44a.
Appellants make two arguments in support of their request to vacate the monetary sanctions order.16 They first claim
Finally, they rely on the fact that
Their second argument is based on their interpretation of Berger‘s behavior during his deposition. They claim that even if we agree with the magistrate judge‘s finding that
We are not persuaded by either contention. Beginning with appellants’ interpretation of the language of
In addition, while we recognize that the court‘s statement in Welch Foods supports appellants’ interpretation of the language of
In Southern Union the defendant Southern Union Co. (“Southern Union“) served notice on the RTC that it intended to depose it pursuant to
Relying upon the Court of Appeals for the Second Circuit‘s opinion in Salahuddin, a case cited subsequently in Welch Foods, the RTC contended that sanctions pursuant to
Were we here faced with a case involving the deposition of a natural person we might be inclined to agree with the reading of Rule 37(d) by our Second Circuit colleagues [in Salahuddin]. The deposition of a corporation, however, poses a different problem, as reflected by Rule 30(b)(6). Rule 30(b)(6) streamlines the discovery process. It places the burden of identifying responsive witnesses for a corporation on the corporation. Obviously, this presents a potential for abuse which is not extant where the party noticing the deposition specifies the deponent. When a corporation or association designates a person to testify on its behalf, the corporation appears vicariously through that agent. If that agent is not knowledgeable about relevant facts, and the principal has failed to designate an available, knowledgeable, and readily identifiable witness, then the appearance is, for all practical purposes, no appearance at all.
In the instant case, RTC possessed documents that clearly identified [the eventual deponent] as having personal knowledge of the subject of the deposition. RTC did not furnish those documents or designate [that deponent] until after it had designated Perry and Wieting, obliged Southern Union‘s counsel to travel from Washington, D.C. to Dallas for a useless deposition, and been served with Southern Union‘s motion for sanctions. The finding that RTC did not make a meaningful effort to acquit its duty to designate an appropriate witness is manifest. The district court did not abuse its discretion in awarding fees and costs under Rule 37(d).
Following the reasoning in Southern Union, several courts similarly have read the phrase “fails ... to appear” in
We agree with the distinction the Court of Appeals drew in Southern Union, and find its analysis persuasive.18 In reality if a
We reject appellants’ final contention that Berger‘s responses during his deposition did not support the district court‘s finding that he failed to cooperate with appellees’ attorneys, and that his conduct was tantamount to a failure to appear that warranted sanctions under
First, when Berger was asked about the Agreement he signed between USLR and Essex, he stated that he had no recollection of (1) seeing or signing the Agreement, (2) negotiating the Agreement (or who participated in its negotiation), (3) drafting the various provisions in the Agreement (or who participated in its drafting), or (4) the circumstances surrounding the purchase of the Property, i.e.,
Obviously, as appellants’
In any event, we believe that the magistrate judge‘s finding that Berger engaged in discovery abuses plainly is justified on this record. The magistrate judge had ample evidence of Berger‘s failure to cooperate, which in turn rendered his deposition a virtual non-event. Accordingly, we will affirm the monetary sanctions ordered pursuant to
IV. CONCLUSION
For the foregoing reasons, the district court‘s orders of August 10, 1999, and December 16, 1999, will be affirmed.
UNITED STATES of America, Appellant, v. David G. BOCKIUS. No. 99-1973. United States Court of Appeals, Third Circuit. Argued July 10, 2000. Filed Sept. 25, 2000.
Notes
We reject appellants’ arguments in their entirety. First, appellants have not presented any evidence with respect to their request for a declaratory judgment as to future response costs under CERCLA demonstrating that such relief is appropriate. Given our discussion in the text that follows, it is clear that appellants have not incurred any response costs to date, and it is undisputed that Essex, rather than appellants, is bound contractually to complete the cleanup of the Property and obtain final DEP approval. Thus, there is nothing in the record suggesting that appellants ever will incur response costs, and there is no potential for injury that is “sufficiently immediate and real” so as to warrant declaratory relief pursuant to section 113(g)(2) of CERCLA,
Finally, we agree with the district court‘s disposition of the Spill Act claim seeking both monetary and equitable relief. While we have considered appellants’ argument on this score, which essentially consists only of a citation to T & E Industries, Inc. v. Safety Light Corp., 123 N.J. 371, 587 A.2d 1249 (1991), we fail to see how the case is germane here because it did not present claims under the Spill Act. In any event, after reviewing the applicable statutory provisions and case law on point, we are convinced that the district court did not err in dismissing count IV. Accordingly, we will affirm the court‘s dismissal of the Spill Act claim without further discussion. See
(d) Failure of Party to Attend at Own Deposition or Serve Answers to Interrogatories or Respond to Request for Inspection. If a party or an officer, director, or managing agent of a party or a person designated under
The failure to act described in this subdivision may not be excused on the ground that the discovery sought is objectionable unless the party failing to act has a pending motion for a protective order as provided by