BOROUGH OF BERLIN v. REMINGTON & VERNICK ENGINEERS, et al.

 

NOT FOR PUBLICATION WITHOUT THE

APPROVAL OF THE APPELLATE DIVISION

SUPERIOR COURT OF NEW JERSEY

APPELLATE DIVISION

DOCKET NO. A-3881-03T13881-03T1

BOROUGH OF BERLIN,

Plaintiff-Appellant,

v.

REMINGTON & VERNICK

ENGINEERS, a Professional

Corporation, JAMES F.

SCHULTES, JR., JOHN O'BRIEN,

MARK PROSTKO and

A. C. SCHULTES, INC.,

a New Jersey Corporation,

Defendants-Respondents.

_______________________________

 

Argued November 1, 2005 - Decided August 23, 2006

Before Judges Kestin, Lefelt and Seltzer.

On appeal from the Superior Court of

New Jersey, Law Division, Camden County,

L-2774-99.

Christopher Norman argued the cause

for appellant (Norman, Kingsbury and

Norman, attorneys; Mr. Norman on the

brief).

Ellis I. Medoway argued the cause

for respondent Remington & Vernick

Engineers (Archer and Greiner, attorneys;

Ellis I. Medoway, on the brief).

William F. Ziegler argued the cause

for respondents A. C. Schultes Inc.,

James F. Schultes, Jr., John O'Brien,

and Mark Prostko (Holston, MacDonald,

Uzdavinis and Ziegler, attorneys;

Mr. Ziegler and Samuel J. Myles,

on the brief).

PER CURIAM

Plaintiff, Borough of Berlin (Berlin), appeals from a February 11, 2004, order that granted summary judgment to defendant Remington & Vernick Engineers (R & V); and a separate February 11, 2004, order that granted summary judgment to defendant A. C. Schultes, Inc. (Schultes). We reverse both orders, and remand for further proceedings.

The litigation has its genesis in a notification from the Department of Environmental Protection (DEP) to Berlin that Berlin would have to reduce the number of gallons of water it was pumping from the Potomac-Rariton Magothy aquifer. Berlin, thereupon, began to explore alternative water supply sources and, ultimately, determined to drill new wells on property within its borders. It retained R & V, which apparently was then acting as its municipal engineer, to plan, implement and design the wells. Berlin also employed Schultes to drill test wells; to conduct the "72-hour Pump Test" necessary to get DEP approval for the permanent wells; and to employ a hydrogeologist to monitor surface water bodies within the well's "sphere of influence." Schultes completed its work no later than August 12, 1994.

Two wells were ultimately constructed after DEP had approved the results of the preliminary testing. The wells went "on-line" in April 1997. Shortly thereafter, Berlin began to receive complaints of an odor emanating from them. Both wells were shut down shortly thereafter as the result of significant levels of isopropylmethoxypyrazine (IPMP), an odorous chemical compound. The installation of a treatment system allowed the wells to be returned to operation; but one of the wells, #12, was later removed from operation permanently because it adversely affected the water level of a nearby stream and jeopardized protected flora.

On April 27, 1999, Berlin filed its complaint against R & V, alleging negligence in the planning, design and implementation of the wells. No claim was made against Schultes, apparently because, as a result of a change of municipal administration, Berlin was not aware of the role Schultes had played in the placement of the wells. That suit was dismissed when a motion judge concluded the Affidavit of Merit, see N.J.S.A. 2A:53A-27, supplied by Berlin was insufficient to support a claim against an engineering firm.

We reversed. Berlin v. Remington & Vernick Engineers, 337 N.J. Super. 590 (App. Div. 2001), certif. denied, 168 N.J. 294 (2001). We noted that "R & V's negligent conduct is claimed to arise from the hydrogeologic studies and testing conducted by its hydrogeologist employee . . . ." Id. at 597. Because we determined that "the liability pressed against the engineering firm is solely vicarious[,]" id. at 598, we limited Berlin's liability claim on remand "to whether R & V's hydrogeologist negligently sited the well in question and whether the hydrogeologist at the time was employed by or working for R & V." Id. at 599.

During the discovery that followed the remand, Berlin learned of the participation of Schultes. On January 30, 2003, Berlin amended its complaint to add Schultes and three of its employees. The amended complaint, in pertinent part, asserted that: "Schultes breached the specification of the 72 Hour Pump Test by: failing to monitor water levels of the pond which is located 700' to the North of Well #12 to determine expected impacts in accordance with [DEP requirements]." The amended complaint also specifically identified Michael Cole as the hydrogeologist employed by R & V who was responsible for siting the well.

Both R & V and Schultes moved for summary judgment. Berlin initially sought a postponement to allow it to amend its complaint as the result of DEP action permanently revoking the permit for the well adversely impacting neighboring water. That request was denied and the motion judge granted both motions. As to R & V, the judge explained:

But what this whole issue boils down to here today is whether or not [Cole] was a hydrogeologist, and if so, was he an employee of Remington & Vernick. . . . If -- he was a hydrogeologist, he was an employee. I think there is no doubt about it because he had to answer to Sullivan [the township engineer] . . . up the line. But I do not find that he was a hydrogeologist and, even if he was a hydrogeologist, he had nothing to do with the siting of this well. His recommendations to his superiors were not followed, such as, you know, low yield, move it somewhere else, and that decision Mr. Sullivan, I believe it was -- let's see, Berlin gave directions as to where the well would be sited and it was Remington and Vernick's engineers who ran the project together with the DEP; Berlin officials who made the ultimate decision.

The judge summarized his decision as to R & V as follows:

Based on everything that I have read, seen and heard in this case, I find that Remington & Vernick are entitled to summary judgment as Mr. Cole is not a hydrogeologist. Mr. Cole is a geologist who reported to the engineers and the engineers are out so the Appellate Division agreed to that issue and it's a circle. And, therefore, the motion for summary judgment is granted.

The judge dismissed the claim against Schultes on statute of limitations grounds. He believed that "the discovery rule is not applicable to contracts[]" and ruled that "the statute of limitations has run and the case is dismissed." We deal first with the ruling dismissing the complaint as to Schultes.

I

We begin by briefly restating familiar principles concerning the statute of limitations. Whether a particular cause of action is barred by a statute of limitations is determined by a judge rather than a jury. See Lopez v. Swyer, 62 N.J. 267, 275 (1973); Fernandi v. Strully, 35 N.J. 434, 449 (1961). The judge's determination of the legal consequences of established facts is not due any special deference from us. See Manalapan Realty, L.P. v. Twp. Committee of Manalapan, 140 N.J. 366, 378 (1995). Accordingly, our review of the decision to dismiss is de novo.

N.J.S.A. 2A:14-1 provides that actions for injury "to real or personal property . . . or for recovery upon a contractual claim . . . shall be commenced within 6 years next after the cause of any such action shall have accrued." N.J.S.A. 2A:14-2 requires that every action at law "for an injury to the person

. . . shall be commenced within 2 years next after the cause of any such action shall have accrued." No injury to the person is alleged in this complaint and it is clear that we are concerned with the 6 year statute.

The legislature has not defined the phrase "shall have accrued," leaving the interpretation of this "rather obscure statutory phraseology" to the courts. Fernandi v. Strully, 35 N.J. 434, 439 (1961). The phrase has been given meaning by reference to the purpose served by a statute of limitation. That purpose "is to stimulate prompt action and to penalize negligence, while promoting repose by establishing stability in human affairs. Stated differently, the purpose of statutes of limitations is to protect defendants from unexpected enforcement of stale claims by plaintiffs who fail to use reasonable diligence prosecuting their claims." Lafage v. Jani, 166 N.J. 412, 423 (2001) (citation omitted).

Generally, a cause of action accrues when an "injury" is sustained as the result of the action of another. Rosenau v. City of New Brunswick, 51 N.J. 130, 137 (1968). This is usually the date on which the tortious conduct took place. Beauchamp v. Amedio, 164 N.J. 111, 116 (2000). However,

[u]nder special circumstances and in the interest of justice, we have adopted the discovery rule to postpone the accrual of a cause of action when a plaintiff does not and cannot know the facts that constitute an actionable claim. See Lynch v. Rubacky, 85 N.J. 65 (1981); Tevis [v. Tevis], 79 N.J. 422 [(1979)]; Lopez v. Swyer, 62 N.J. 267 (1973); Fernandi v. Strully, 35 N.J. 434 (1961). The discovery rule is a rule of equity that ameliorates "the often harsh and unjust results [that] flow from a rigid and automatic adherence to a strict rule of law." Lopez, supra, 62 N.J. at 273-74.
 
The discovery rule focuses on "an injured party's knowledge concerning the origin and existence of his injuries as related to the conduct of another person. Such knowledge involves two key elements, injury and fault." Lynch, supra, 85 N.J. at 70. The limitations period begins to run when a plaintiff knows or should know the facts underlying those elements, not necessarily when a plaintiff learns the legal effect of those facts. Burd v. New Jersey Tel. Co., 76 N.J. 284, 291-92 (1978). Thus, the discovery rule encompasses two types of plaintiffs: those who do not become aware of their injury until the statute of limitations has expired, and those who are aware of their injury but do not know that it may be attributable to the fault of another. Ibid.; accord Tevis, supra, 79 N.J. at 432; Lopez, supra, 62 N.J. at 274.
 
[Grunwald v. Bronkesh, 131 N.J. 483, 492-493 (1993).]

Berlin claims to fall within the first class of plaintiffs, i.e. one that did not discover its damage until after the six year period, measured from the date on which Schultes breached its contract, had expired. It claims it first learned that it suffered damage as the result of Schultes's failure to employ a hydrogeologist and to monitor surface water in 1997 when the well began producing an objectionable odor.

The motion judge felt he did not have to consider that issue because he believed that "the discovery rule is not applicable to contracts." We cannot subscribe to such a broad conclusion. It is certainly true that equitable considerations generally require "the discovery rule [be] applied most frequently in personal injury or negligence-type actions, which by their nature are often self-concealing or undiscoverable." County of Morris v. Fauver, 153 N.J. 80, 109 (1998). Contract actions often involve discrete breaches leading to immediately obvious damages. There are occasions, however, when the breach of contract has the flavor of a negligence action.

New Market Poultry Farms, Inc. v. Fellows, 51 N.J. 419 (1968), for example, involved a professional engineer and land surveyor who was alleged to have negligently performed his contractual obligation to survey property and prepare an acreage calculation. The cause of action was held to accrue eleven years after the breach when the injury became apparent. Indeed, before the adoption of the ten-year statute of repose, N.J.S.A. 2A:14-1.1, the discovery rule was often applied to construction contracts. See County of Hudson v. Terminal Construction Corp., 154 N.J. Super. 264, 268 (App. Div. 1977) certif. denied, 75 N.J. 605 (1978). We think the question of whether the discovery rule should be applied to a contract action depends upon whether the breach of that contract causes injury that is "self-concealing or undiscoverable."

In this case, the alleged breach is more than the simple failure to hire a hydrologist; rather, it consists of the failure to monitor surface waters as required by Schultes's contract. Berlin claims that this failure led to the construction of wells that were ultimately removed from operation and that it could not have discovered the damage caused by the improper location of the wells until they had become operational.

Schultes does not claim that Berlin could have known of the injury caused by the asserted failure to monitor until the well went "on-line" and we are unable to understand how the improper siting could have been discovered before then. It is true, as Schultes points out, that its work was supervised by Berlin's engineer, R & V. We believe that this supervision might, depending on the level of supervision required of R & V, which is not revealed by this record, allow a conclusion that Berlin knew, or should have known, that Schultes had breached the contract by not retaining a hydrogeologist and, perhaps, by not monitoring the surface water. However, if applicable, the discovery rule postpones accrual of the cause of action until there is knowledge of both breach and damage. In an analogous situation it has been held that "[m]ere knowledge of an attorney's negligence does not cause a legal-malpractice claim to accrue. The client must sustain actual damage." Olds v. Donnelly, 150 N.J. 424, 437 (1997). See also New Market Poultry Farms, Inc., supra, 51 N.J. at 425. ("mere . . . breach of duty is not enough" to start the statute) (citing Rosenau v. City of New Brunswick, 51 N.J. 130 (1968)). We do not see why the same principal should not apply here.

Accordingly, we cannot agree with the judge's complete rejection of the discovery rule in this case. If it were to be applied, we believe the accrual of Berlin's cause of action would have been delayed until the odor became apparent in 1997 and the complaint would have been timely filed. The question of whether to apply the doctrine is, however, not an easy one.

The decision to apply the rule requires a recognition that

[i]t may also be unjust, however, to compel a person to defend a law suit long after the alleged injury has occurred, when memories have faded, witnesses have died and evidence has been lost. After all, statutes of limitations are statutes of repose and the principal consideration underlying their enactment is one of fairness to the defendant. Developments in the Law-Statutes of Limitations, 63 Harv. L. Rev. 1177, 1185 (1950). So in each case the equitable claims of opposing parties must be identified, evaluated and weighed.
 
[Lopez v. Swyer, 62 N.J. 267, 274 (1973).]

So, for example, the rule was applied in New Market Poultry Farms, Inc., supra, only after the Court concluded that there was no danger of a "fraudulent, false, frivolous, speculative or uncertain claim" or that "by reason of the passage of time defendant's testimonial proof of a defense would be made more difficult." 51 N.J. at 425.

The motion judge did not consider those equitable conditions for the application of the discovery rule. Specifically, he did not comment on Schultes's claim that it had destroyed records relating to its work on the wells.

Accordingly, we remand to allow Schultes to explain, if it chooses to do so, that, more than six years before the suit was filed, Berlin knew, or, in the exercise of reasonable diligence, should have known of both Schultes's breach and the occurrence of damages. In that case the statute of limitations would have run and the suit would have been time-barred. If Schultes seeks to make that showing, Berlin, in countering it, may not claim that it was unaware of Schultes's involvement because its administration had changed in the interim and the new administration was unaware of the contracts entered into by the prior administration.

Only if the judge concludes that Berlin neither knew nor should have known of both the breach and the damages flowing from the breach more than six years before filing suit against Schultes, should he determine whether the equitable considerations underlying the discovery rule should be applied under the circumstances of this case.

II

We turn now to the dismissal of the complaint against

R & V. Because that dismissal resulted from a summary judgment, we review the result by applying the same test utilized by the motion judge, Prudential Prop. & Cas. Ins. Co. v. Boylan, 307 N.J. Super. 162, 167 (App. Div.), certif. denied, 154 N.J. 608 (1998), without affording any special deference to the judge's interpretation of the law. Manalapan Realty L.P. v. Twp. Committee of Manalapan, 140 N.J. 366, 378 (1995). Accordingly, we search the record to determine "whether the competent evidential materials presented, when viewed in the light most favorable to the non-moving party, are sufficient to permit a rational factfinder to resolve the alleged disputed issue in favor of a non-moving party." If so, the motion was incorrectly granted. Brill v. Guardian Life Ins. Co. of Am., 142 N.J. 520, 540 (1995); R. 4:46-2.

With this standard in mind, we review the record to determine whether there was sufficient evidence to allow a reasonable factfinder to determine that R & V had employed Michael Cole as a hydrogeologist and, if so, whether there was sufficient evidence to allow a reasonable factfinder to conclude the hydrogeologist had sited the well.

Hydrogeology is the science related to "ground water flow and use." Bahrle v. Exxon Corp., 279 N.J. Super. 5, 32 (App. Div. 1995) aff'd 145 N.J. 144 (1996). Although the record is not clear, it appears that data respecting the quality of the water to be found at a prospective well must be gathered and submitted to the DEP together with data relating to the effect the well on surrounding bodies of water. The initial data is gathered in what is known as a "72-Hour Pump Test". That test will ultimately determine the "radius of influence," or the extent of the area surrounding the well which is affected by it. That data is correlated and submitted to DEP in support of an application for a Water Allocation Permit, which ultimately results in final approval for the use of the proposed well.

Michael Cole was an engineer and geologist employed by R & V. His immediate supervisor, Gregory J. Sullivan, testified in deposition that Cole worked in the environmental department and that his area of expertise was "ground water, wetlands, underground storage tank installations, underground storage tank removals." Sullivan testified that Cole was "the person that performed the radius of influence calculations from the test data . . ." and that, although he had passed his findings through the R & V chain of command, "the ultimate source of the hard hydrogeological technical analysis was Mike Cole . . . ." Sullivan indicated that Cole was given that responsibility because he "was the person with the requisite hydrogeological expertise in this instance . . . ." Cole testified, and agreed that he "had done some work involving ground water" which involved "ground water contamination or remediation or something involving ground water . . . ."

Hydrogeologists are not licensed by the State of New Jersey. Nevertheless, given this testimony, it seems clear that regardless of his title, Cole was performing services involving ground water flow and use. At the very least, Sullivan considered him to be the source of the hydrogeologic data utilized in obtaining a permit for the well. Given this testimony as to Cole's function, a reasonable factfinder might conclude that Cole was performing the function of a hydrogeologist.

We believe the motion judge inappropriately emphasized Cole's title as opposed to the nature of the work he was doing. Given his analysis of the water quality obtained from the well and his calculation of its sphere of influence together with his superior's characterization of his work as hydrogeologic, we believe there was more than sufficient evidence to permit, although not necessarily to compel, a finding that Cole was performing the work of a hydrogeologist with respect to the well in question. There was also no question that Cole was employed by R & V.

We recognize that Schultes was contractually obligated to provide a hydrogeologist while R & V was not. That Schultes did not employ a hydrogeologist does not detract from the evidence that could provide a basis for concluding that R & V performed that function in analyzing the 72-Hour Pump Test data and preparing the Water Allocation Permit Application. That evidence would permit a reasonable factfinder to find that Berlin had met the first prong of the remand by showing R & V had employed a hydrogeologist.

We turn then to determine if there was sufficient evidence to permit a factfinder to conclude that Cole "sited" the well. The judge rejected Berlin's claim, finding that Cole's supervisor, Sullivan, was responsible for siting the well. The judge rejected that claim because Cole

had nothing to do with the siting of the well. His recommendations to his superiors were not followed, such as, you know, low yield, move it somewhere else and that decision, Mr. Sullivan, I believe it was -- let's see, Berlin gave directions as to where the well would be sited and it was Remington and Vernick's engineers who ran the project together with the DEP; Berlin's officials who made the ultimate decision.

We agree that Cole reported to superiors who ultimately determined where to site the well. Indeed, the record is clear that Cole recommended to his superior, Sullivan, that Berlin should not submit a Water Allocation Permit Application for well #12, but should, instead, consider looking for other sources of water. It was Sullivan who rejected that suggestion. Nevertheless, we believe the judge read too strictly our limitation of R & V's liability when he concluded Berlin could be liable only if its hydrogeologist actually made the decision to site the well in a particular location.

That would be too high a barrier for any plaintiff. The ultimate decision for the location of the well must be made by Berlin. It can rely only on recommendations made by its employees. The record, however, when viewed in the light most favorable to Berlin, would support a conclusion that the ultimate recommendations were provided by Sullivan on hydrogeologic information provided by Cole. There was evidence that Cole, for example, computed the sphere of influence of the wells and concluded that the sphere of influence of well #12 did not include any neighboring wetlands. There are facts within the record indicating that the sphere of influence was improperly calculated and that neighboring wetlands were affected. The Department of Environmental Protection ultimately determined that there was a connection between the well and surrounding wetlands. As a result of that conclusion, well #12 was permanently removed from service.

Berlin, at trial, would be permitted to demonstrate that the information provided to Sullivan did not contain information with respect to the hydraulic connection between the well and the associated wetlands, ultimately resulting in the loss of the well. The short answer to the siting issue, however, is that we never intended Berlin to be required to demonstrate that Cole himself was responsible for the decision to locate the well; all that was required was that the hydrogeologic data, on which the decision was based, came from Cole. Sullivan agreed that the "technical data and analysis" provided by Cole was "a required component of the Water Allocation Permit Application. It's a required component." We believe the evidence, viewed as Brill requires, was sufficient to meet the test set out in our prior opinion.

R & V argues that even if its hydrogeologist negligently failed to calculate the sphere of influence, so that the monitoring triggered by a proper calculation never occurred, there were no proximately caused damages. This follows, R & V claims, because the monitoring would not have required testing for the IPMP that initially shut down the wells. There was, however, evidence in the record that the Pinelands Commission had objected to the location of well #12 because of its proximity to wetlands. A reasonable inference might be drawn that had the Commission's concerns been validated by Cole, at least well #12 would never have been drilled. Although there may be substantial doubt as to Berlin's ability to prevail at trial, we believe summary judgment was entered inappropriately.

On remand, the judge may reconsider whether to allow an amendment to the complaint to deal with the permanent removal of well #12 as the result of its adverse impact on surrounding waters. It appears to us, that the proposed amendment did not add a new cause of action, but rather simply a new theory of damages. If that is a correct analysis of those pleadings, it may be appropriate to permit the amendment.

The remaining arguments of the parties that we have not addressed, are without sufficient merit to justify discussion in a written opinion. R. 2:11-3(e)(1)(E).

Reversed and remanded.

 

Berlin has not claimed that the ten-year statute of repose with respect to improvements to real property, N.J.S.A. 2A:14-1.1, has any applicability to this claim.

The connection between well #12 and the other well is not clear on this record. Berlin, for example, does not address the proximate cause argument as to the second well. Because we reverse the dismissal of the complaint as to R & V, we leave to the trial court the question of whether the complaint remains viable as to actions concerning the second well.

(continued)

(continued)

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A-3881-03T1

 

August 23, 2006