UNITED STATES OF AMERICA v. NVR, INC., No. 1:2017cv04346 - Document 19 (D.N.J. 2020)
Court Description: OPINION. Signed by Judge Joseph H. Rodriguez on 12/8/2020. (rtm, )
Download PDF
<![CDATA[
UNITED STATES OF AMERICA v. NVR, INC. Doc. 19 Case 1:17-cv-04346-JHR-JS Document 19 Filed 12/09/20 Page 1 of 12 PageID: 371 Dockets.Justia.com Case 1:17-cv-04346-JHR-JS Document 19 Filed 12/09/20 Page 2 of 12 PageID: 372 parties settled the dispute and executed a Consent Decree (the “Consent Decree or “Decree”), which this Court granted and entered on Septem ber 7, 20 17. [Dkt. No. 5]. NVR now m oves to term inate the Consent Decree, providing that it has com plied with the Decree and “satisfactorily” com pleted the requirem ents for term ination. [Dkt. No. 91, p. 5]. The Governm ent opposes NVR’s Motion “because NVR m aterially failed to com ply with the decree for ‘a m inim um of’ 30 m onths.” [Dkt. No. 10 , p.3]. Specifically, it contends that NVR failed: (1) to obtain CWA perm its prior to com m encing construction activity in num erous building lots and locations; and (2) to develop an effective com pliance program . B. Th e Cle an W ate r Act The purpose of the CWA is “to restore and m aintain the chem ical, physical, and biological integrity of the Nation's waters.” 33 U.S.C.A. § 1251. In accordance with this objective, the CWA m akes unlawful, “the discharge of any pollutant by any person” unless it is authorized by the Act. 33 U.S.C.A. § 1311(a). The act authorizes such discharge when done in com pliance with National Pollutant Discharge Elim in ation System (“NPDES”) perm its. Id. § 1362(12). When authorized by the EPA, States m ay also issue their own perm its for discharge into navigable waters within their jurisdiction. 33 U.S.C. § 1342(b). Under CWA Section 40 2(p), the discharge of storm water associated with industrial activity requires a perm it. 33 U.S.C. § 1342(p). Storm water discharge with industrial activity “m eans the discharge from any conveyance that is used for collecting and conveying storm water and that is directly related to m anufacturing, processing or raw m aterials storage areas at an in dustrial plant”—including: Construction activity including clearing, grading and excavation, except 2 Case 1:17-cv-04346-JHR-JS Document 19 Filed 12/09/20 Page 3 of 12 PageID: 373 operations that result in the disturbance of less than five acres of total land area. Construction activity also includes the disturbance of less than five acres of total land area that is a part of a larger com m on plan of developm ent or sale if the larger com m on plan will ultim ately disturb five acres or m ore .... C.F.R. § 122.26 (b)(14), (b)(14)(x). The CWA im poses strict liability for violations of NPDES perm its. 33 U.S.C. §§ 1311(a), 1319(d). The United States can in itiate civil enforcem ent actions again st persons for these violations on behalf of the EPA. Id. § 1319. II. Analysis “A consent decree is a hybrid of a contract an d a court order.” Holland v. New J ersey Dep't of Corr., 246 F.3d 267, 277 (3d Cir. 20 0 1). Parties enter into consent decrees “after careful negotiation has produced agreem ent on their precise term s. . . . Naturally, the agreem ent reached norm ally em bodies a com prom ise; . . . [and] the scope of a consent decree m ust be discerned within its four corners, and not by reference to what m ight satisfy the purposes of one of the parties to it.” United States v. Arm our & Co., 40 2 U.S. 673, 681– 82, 91 S. Ct. 1752, 1757, 29 L. Ed. 2d 256 (1971). The Third Circuit has found that “the principles of local law guiding the interpretation of contracts” govern the interpretation of consent decrees. Kean v. Adler, 65 F. App'x 40 8, 412 (3d Cir. 20 0 3). When interpreting a consent decree, the Court m ust first “determ ine whether its term s unam biguously cover the dispute in question.” United States v. State of New J ersey, 194 F.3d 426, 430 (3d Cir. 1999). The term s here, unam biguously cover this dispute. A. Re le van t Te rm s o f th e Co n s e n t D e cre e Generally, the Decree executed by the parties “requires NVR to im plem ent a com prehensive, corporate-wide program to im prove com pliance with federal laws that 3 Case 1:17-cv-04346-JHR-JS Document 19 Filed 12/09/20 Page 4 of 12 PageID: 374 pertain to controlling storm water pollution.” [Dkt. No. 4-1, p. 4]. More specifically, the Consent Decree provides a “Com pliance Program ” that NVR, “its successors an d assigns, as well as any subsidiaries of NVR that engage in Construction Activity” (“Builder”) agreed to fulfil for 30 m onths.” (Consent Decree, p. 6). In sum , the Com pliance Program required NVR to com ply with CWA Storm Water Requirem ents, have at least one Site Storm Water Com pliance Representative for each sight, one Division Storm Water Com pliance Representative for each site, provide notice of a list of its sites to the EPA, obtain perm its prior to com m encing builder construction activity at a site, prepare records, conduct inspections and reviews, install and m aintain all required storm water controls and practices for Builder construction activity, provide site oversight and review, subm it three (3) national com pliance sum m ary reports, and provide a storm water training program . The Consent Decree provides the following requirem ents for term ination of the Decree: (i) Builder has com plied with the requirem ents of Section IV of this Consent Decree (Builder's Com pliance Program ) for a m inim um of two and half years (30 m onths) following the Date of Entry ("30 m onth Anniversary"), (ii) Builder has subm itted a m inim um of three National Com pliance Sum m ary Reports, (iii) Builder has paid the civil penalty and any accrued stipulated penalties as required by this Consent Decree, and (iv) Builder has no unresolved m atters subject to dispute resolution pursuant to Section IX (Dispute Resolution). (Id. at ¶ 71). Pursuant to the Decree, the Builder's Com pliance Program ends on the 30 m onth Anniversary—March 7, 20 20 —unless “otherwise ordered by the Court under Paragraph 72.e.” (Id. at ¶ 71). Paragraph 72. e. provides that the Decree’s requirem ents end on the 30 th Anniversary, “unless the Court determ in es, in an order to deny a m otion to 4 Case 1:17-cv-04346-JHR-JS Document 19 Filed 12/09/20 Page 5 of 12 PageID: 375 term inate by Builder, that Builder m aterially failed to m eet the requirem ents for term ination under Paragraph 71 of this Decree.” (Id. at ¶72(e)). Thus, the Decree governs its term ination, and the question before the Court is whether NVR m aterially failed to com ply with the Decree. B. N VR’s Co m p lian ce w ith th e D e cre e It is undisputed that, for a period of tim e, NVR was operating 6 of its construction sites without first obtaining the proper perm it, 1 in violation of the com pliance program —under which NVR was required, [p]rior to com m encing Builder Construction Activity at a Site, [to] obtain coverage required under the Applicable Perm it. . . .” (Consent Decree at ¶7(b)). The Governm ent argues that “[b]cause obtaining a perm it is a fundam ental objective of the CWA and the Decree, the significance of failing to obtain a perm it prior to com m encing construction activity at dozens of locations for m onths at a tim e dem onstrates that NVR m aterially failed to com ply with the Decree for 30 m onths as required for term ination.” [Dkt. No. 10 at 10 of 19]. To be sure, allegations that NVR failed to obtain NPDES perm its under the CWA led to the entry of this Decree, and “relevant statutes and regulations m ay som etim es be used to shed light on the term s of a consent decree.” McDowell v. Philadelphia Hous. Auth. (PHA), 423 F.3d 233, 239 (3d Cir. 20 0 5) (citations om itted). Generally, however, “a court should confine its interpretation to the four corners of the decree and not try to divine its m eaning from speculation about the purposes of the parties or the background legal regim e.” McDowell v. Philadelphia Hous. Auth. (PHA), 423 F.3d 233, 239 (3d Cir. 20 0 5). Thus, whether obtaining a perm it is a fundam ental objective of the CWA is not 1 [Dkt. No. 9-1, p. 13; Dkt. No. 10 , p. 11]. 5 Case 1:17-cv-04346-JHR-JS Document 19 Filed 12/09/20 Page 6 of 12 PageID: 376 conclusive of whether failure to obtain a perm it is a m aterial failure of the Decree. NVR, argues that its “errors in perm it coverage com prise not only a sm all portion of NVR’s perm itted locations, but are also a de m inim is piece of NVR’s overall com pliance efforts.” [Dkt. No. 9-1, p. 16 of 22]. During the 30 -m onth term of the Decree, NVR required 7,657 storm water perm its. In year one, NVR m istakenly failed to obtain 6 perm its out of the 3,910 perm its required. 2 Thus, NVR, provides that the m issing perm its in year one represent only .15% of the total num ber of perm its NVR required for that year. This non-com pliance lasted a total of 626 days during year one of the Decree. [Dkt. No. 9-1, p. 18 of 22; Dkt. No. 10 , p. 11 of 19]. NVR, however, argues that this m issing perm it coverage represents less than 1% of over 298,0 0 0 days of perm it coverage required. During the tim e of m issing perm it coverage, NVR claim s that it operated these sites as though a perm it were properly in place. 3 The Governm ent does not dispute that “som e violations under the Decree were not m aterial[,]” including certain violations regarding perm it coverage. [Dkt. No. 10 , p. 17 of 19]. Indeed, the Governm ent does not take issue with NVR’s failure to obtain 2 perm its in year two, 1 perm it in year three, or the failure to com plete certain inspections. But it argues that “the correct an d fair m easure of m ateriality depends upon an absolute m easure of the underlying failure, not a com parative or relative m easure.” (Id. at 4 of 19). The Governm ent, however, cites no authority to support its proposition. 2 The Government claims that NVR failed to obtain CWA perm its for 92 “lots,” whereas NVR describes its failure in term s of 6 “sites.” NVR explains “At some locations, NVR obtains a perm it to cover m ultiple lots in a subdivision or com m unity. At others, it m ust obtain an individual perm it for each lot.”[Dkt. No. 12, p. 12]. NVR claim s that only one permit was required for each of the 6 sites with reported issues. (Id.) 3 NVR further outlines the operation of the relevant sites in detail in its briefing. [Dkt. No. 9-1, p. 17 16-17 of 22]. 6 Case 1:17-cv-04346-JHR-JS Document 19 Filed 12/09/20 Page 7 of 12 PageID: 377 Under New J ersey law “[w]here a contract calls for a series of acts over a long term , a breach will be ‘m aterial’ if it tends to ‘defeat the purpose of the contract.’” New J ersey, Dep't of Envtl. Prot. v. Gloucester Envtl. Mgmt. Servs., Inc., 264 F. Supp. 2d 165, 179 (D.N.J . 20 0 3) (quoting Medivox Prods., Inc. v. Hoffm ann-LaRoche, Inc., 256 A.2d 8 0 3, 8 0 9 (N.J . Law. Div. 1969)). There is no evidence that NVR’s failure to com ply with the perm itting requirem ent in Year 1 defeats the Decree’s purpose. Additionally, both parties recognize that, under the Second Restatem ent: In determ ining whether a failure to render or to offer perform ance is m aterial, the following circum stances are significant: (a) the extent to which the injured party will be deprived of the benefit which he reasonably expected; (b) the extent to which the injured party can be adequately com pensated for the part of that benefit of which he will be deprived; (c) the extent to which the party failing to perform or to offer to perform will suffer forfeiture; (d) the likelihood that the party failing to perform or to offer to perform will cure his failure, taking account of all the circum stances including any reasonable assurances; (e) the extent to which the behavior of the party failing to perform or to offer to perform com ports with standards of good faith and fair dealing. Restatem ent (Second) of Contracts § 241 (1981); see also Scottsdale Ins. Co. v. Weiner, No. CIV.0 3-3857(J BS/ J S), 20 10 WL 445649, at *4 (D.N.J . Feb. 1, 2010 ); Roach v. BM Motoring, LLC, 155 A.3d 985, 992 (N.J . 20 17). These factors are “applied in the light of the facts of each case in such a way as to further the purpose of securing for each party his expectation of an exchange of perform ances.” Restatem ent (Second) of Contracts § 241 (198 1). 7 Case 1:17-cv-04346-JHR-JS Document 19 Filed 12/09/20 Page 8 of 12 PageID: 378 As to the first factor—the loss of benefit to the injured party—"all relevant circum stances m ust be considered.” Id. Here, the Governm ent provides that NVR’s breach deprives it of its bargain for 30 m onths of com pliance under the Decree. That is not to say that the ben efit reasonably expected from the parties’ exchange was perfect com pliance. Indeed, the parties’ contem plated NVR’s failure to m eet Decree requirem ents. [See Dkt. No. 4-1, p. 6 (“If NVR fails to m eet the requirem ents set forth in the Decree, then NVR is subject to stipulated penalties.”)]. According to the Governm ent, however, the 30 -m onth period is particularly im portant, given that NVR builds thousands of hom es a year. Here, NVR’s non-com pliance is lim ited to the first 12 m onths of the 30 -m onth Decree Term , an d concerned only a sm all num ber, and overall percentage, of its construction sites. Notably, NVR recognized its non-com pliance, self-reported its failures, and represented that any non-com pliance was not in bad faith, but m ere oversight which it sought to prom ptly correct. The Governm ent even acknowledges that som e of the non-com pliance stem m ed from issues before the Decree took effect. [Dkt. No. 10 , p. 13 of 19]. Therefore, while the Court agrees that a failure to com ply will produce som e loss of benefit to the Governm ent, in light of the surrounding circum stances, any loss to the governm ent as a result of NVR’s non-com pliance was m inim al. As to the extent to which the governm ent can be adequately com pensated for the loss of its benefit, the United States argues that it “can only be com pensated . . . by requiring the Consent Decree to rem ain in effect until NVR can dem onstrate that it has not m aterially failed to com ply for 30 m onths.” [Dkt. No. 10 , p. 13]. The Court cannot find that this in the only com pensation for its loss when under the Decree, NVR is 8 Case 1:17-cv-04346-JHR-JS Document 19 Filed 12/09/20 Page 9 of 12 PageID: 379 subject to stipulated penalties for a failure to m eet requirem ents. In fact, NVR was required to pay the governm ent a fine of $ 250 ,0 0 0 for its noncom pliance—a fee directly contem plated and agreed to by the parties, as a consequen ce of NVR’s actions. “NVR declin ed to pursue form al dispute resolution, and agreed to pay the $ 250 ,0 0 0 stipulated penalty. . . .” [Dkt. No. 10 ,p. 14 of 19]. The Governm ent contends that the relative size of that stipulated penalty for NVR’s failure to obtain a perm it pursuant to the Decree shows the seriousness of the violation. [Dkt. No. 10 , p. 14 of 19]. The penalty for failure to obtain a perm it is 58% of the original civil penalty. While the pen alties “set forth in the Decree reflect the seriousness of the violation,” the am ount of the stipulated penalty alone, does not illustrate the m ateriality of the non-com pliance. [Dkt. No. 4, p. 10 ]. Rather, “[t]he fact that the injured party already has som e security for the other party's perform ance argues against a determ ination that the failure is m aterial.” Restatem ent (Second) of Contracts § 241 (1981). Next, the Court looks to the extent that NVR will suffer forfeiture. The governm ent subm its that NVR will not suffer forfeiture, as the continuance of the Decree would only require additional m onitoring and enforcem ent. Specifically, the Governm ent seeks to require NVR to subm it an additional National Com pliance Sum m ary Report, to docum ent its continued com pliance. NVR’s reporting and m onitoring requirem ents are a sm all burden considering that NVR, at this point, claim s to have an effective Com pliance Program in place. NVR, however, argues that if the Court extends the term of the Decree it would suffer forfeiture because it “would be deprived of the 30 -m onth term that was negotiated by the parties in the Decree.” The Governm ent does not propose NVR begin a new 30 -m onth term of com pliance under 9 Case 1:17-cv-04346-JHR-JS Document 19 Filed 12/09/20 Page 10 of 12 PageID: 380 the Decree; instead, it proposes a new term in ation date, requiring approxim ately eleven (11) additional m onths of com pliance. Thus, NVR would not be deprived of the full 30 m onth term , but would likely suffer som e forfeiture, as there were num erous requirem ents under the Decree that NVR followed for its full term . As an additional year of com pliance is relative to NVR’s violations, which m ostly occurred within the first year of the Decree, that forfeiture is m inor. As to factor four, the Court considers the likelihood that NVR will cure his failure, taking account of all the circum stances including any reasonable assurances. “The likelihood that the failure will be cured is [] a significant circum stance in determ in ing whether [non-com pliance] is m aterial.” Restatem ent (Second) of Contracts § 241 (1981). Here, the parties agree that NVR has already dem onstrated progress and intent to cure its failures. NVR not only took action to obtain perm its for those sites it realized were un-covered, but provides a list of prom pt corrective action taken to address the underlying issues in its first year under the Decree. That corrective action, as the Governm ent concedes, led to “significant im provem ents in its com pliance during the Decree’s second and third com pliance reporting cycles.” [Dkt. No. 9-1, pp. 14-15, p. 14 n.5; Dkt. No. 10 , p 16]. Still, the Governm ent contends that NVR’s failure to obtain perm its dem onstrates its initial com pliance procedures were inadequate. Yet, its com pliance in the rem ain ing 18 m onths is eviden ce that the additional com pliance procedures put in place, are effective. “NVR conceded that additional com pliance m easures and system s were required when it adopted at least five additional corporate-wide procedures to ensure that sim ilar failures would not be repeated.” [Dkt. No. 10 , p. 13 of 19]. Thus, there is a strong likelihood NVR will cure its failures, and the expectation of a cure is 10 Case 1:17-cv-04346-JHR-JS Document 19 Filed 12/09/20 Page 11 of 12 PageID: 381 reasonably secure. In such a case, “in spite of the failure, there is less reason to conclude that the failure is m aterial.” Restatem ent (Second) of Contracts § 241 (1981). Finally, NVR’s behavior com ports with standards of good faith an d fair dealing. The Governm ent does not dispute this fact, but contends that this factor is irrelevant because the CWA is a strict liability statute. The issue before the Court, however, concerns NVR’s com pliance under the Consent Decree, not the CWA. While good faith alone is not conclusive of whether the failures of NVR are m aterial, “[t]he extent to which the behavior of the party failing to perform or to offer to perform com ports with standards of good faith and fair dealing is, . . . a significant circum stance in determ ining whether the failure is m aterial.” Restatem ent (Second) of Contracts § 241 (1981). Here, consideration of the significant circum stances above indicate that NVR’s failure to obtain perm its for certain sites, was not a m aterial failure to com ply with the Decree. The Decree set forth num erous requirem ents that NVR had to follow, which furthered the objective to have NVR “im plem ent a com prehensive, corporate-wide program to im prove com pliance with federal laws that pertain to con trolling storm water pollution.” [Dkt. No. 4-1, p. 4]. NVR certified how it followed all of these other requirem ents, despite its failure to obtain certain perm its. In sum , the Court finds that the loss to the Governm ent for any non -com plian ce, and any forfeiture to NVR if com pliance is extended, is m inim al. However, the Court finds sign ificant that (1) there is a strong likelihood that the failure will be cured, and in fact, has already been cured; (2) NVR acted in good faith in following perm it requirem ents and self-reporting any issues; (3) NVR im plem ented and followed the Decree’s other requirem ents; and (4) has paid stipulated pen alties for its noncom pliance. Together, these factors provide that NVR’s failures were not m aterial. 11 Case 1:17-cv-04346-JHR-JS Document 19 Filed 12/09/20 Page 12 of 12 PageID: 382 Therefore, NVR has satisfactorily com plied with the Consent Decree’s requirem ents for term ination. I. Conclusion For the forgoing reasons, the Court will grant NVR’s Motion to Term inate the Consent Decree. An appropriate Order will be entered. Dated: Decem ber 8 , 20 20 / s/ J oseph H. Rodriguez J OSEPH H. RODRIGUEZ, USDJ 12
]]>
Some case metadata and case summaries were written with the help of AI, which can produce inaccuracies. You
should read the full case before relying on it for legal research purposes.
This site is protected by reCAPTCHA and the Google
Privacy Policy and
Terms of Service apply.
