FIBERMARK NORTH AMERICA, INC v. STATE OF NEW JERSEY DEPARTMENT OF ENVIRONMENTAL PROTECTION

NOT FOR PUBLICATION WITHOUT THE

APPROVAL OF THE APPELLATE DIVISION

 

SUPERIOR COURT OF NEW JERSEY

APPELLATE DIVISION

DOCKET NO. A-6201-08T1

FIBERMARK NORTH AMERICA, INC.,

Plaintiff-Appellant,

v.

STATE OF NEW JERSEY, DEPARTMENT

OF ENVIRONMENTAL PROTECTION,

Defendant-Respondent.

_________________________________

Argued May 3, 2011 Decided August 5, 2011

Before Judges Wefing, Baxter and Koblitz.

On appeal from Superior Court of New Jersey, Law

Division, Hunterdon County, Docket No. L-0294-08.

Joshua W. Denbeaux argued the cause for appellant (Denbeaux & Denbeaux, attorneys; Mr. Denbeaux, R. Bradford Fawley, of the Vermont bar, admitted pro hac vice, Elizabeth R. Wohl, of the Vermont bar,

admitted pro hac vice (Downs Rachlin Martin P.L.L.C.), on the briefs).

Kimberly A. Hahn, Deputy Attorney General argued the cause for respondent (Paula T. Dow,

Attorney General, attorney; Melissa H. Raksa, Assistant Attorney General, of counsel; Ms.

Hahn, on the brief).

PER CURIAM

Plaintiff appeals from a trial court order dismissing its complaint under Rule 4:37-2(b). After reviewing the record in light of the contentions advanced on appeal, we affirm in part, reverse in part, and remand for further proceedings.

James River Paper Company, Inc. (James River) owned paper mills in Warren Glen and Hughesville, New Jersey, that it no longer needed for its own operations. James River leased these mills to two wholly-owned subsidiaries of Specialty Coatings Group, Inc. (Specialty), one of which was Custom Papers Group Holdings (Custom Papers). Custom Papers leased the Warren Glen mill, which was located on the Musconetcong River. As part of the lease transaction, James River agreed to construct and operate a landfill to accept the waste generated in connection with the mill's operations, and it placed the landfill across the Musconetcong River from the Warren Glen mill.

In 1991 James River, Specialty and its two subsidiaries, including Custom Papers, executed an agreement under which the tenants agreed to share in the cost of constructing the landfill and to limit the type and quantity of waste they could deposit into the landfill. Under the agreement, James River was responsible for managing, operating and ultimately closing the landfill in compliance with applicable laws and regulations. The agreement called for the tenants to pay tipping fees to James River, to be adjusted annually in light of the cubic yardage deposited by the tenant the previous year; the agreement specified that the tipping fee was "to reflect the costs of operations, overhead, capital recovery, anticipated closing costs of the [landfill], taxes, long-term monitoring and liability insurance incurred by James River. . . ." Further, it specified that James River would deposit in an interest-bearing escrow account the portion of the tipping fees that related to the anticipated closing costs and set down the formula by which the tenants' share of the closing costs would be determined. The record does not disclose whether the parties abided by that contractual provision.

Paper manufacturing requires the use of quantities of water, not all of which is consumed in the manufacturing process. The water used at the Warren Glen mill could not be directly discharged into the river but first had to be treated; part of the mill's premises included lagoons into which this water would be funneled and treated before being returned to the river. The Warren Glen mill held a permit from the New Jersey Department of Environmental Protection ("DEP") known as a New Jersey Pollutant Discharge Elimination System ("NJPDES") permit, authorizing the return to the river of the water remaining at the completion of the mill's processing operations after it had been treated in the lagoons.

The parties to the 1991 agreement recognized that operation of the landfill would generate leachate, that is, water that percolated through the contents of the landfill. The Warren Glen landfill was designed and constructed so that the leachate, through the force of gravity, would accumulate at the "toe" of the landfill and then, again through gravity, flow through a pipe across the Musconetcong River to the treatment lagoons at the Warren Glen mill, where it was treated with the waste water from the paper mill and ultimately discharged into the river.

Thus, under the 1991 agreement, the operator of the Warren Glen mill had the right to deposit its waste into the landfill, and the operator of the landfill had the right to funnel its leachate to Warren Glen's treatment lagoons.

In or about 1995, James River went through a corporate reorganization, one result of which was the sale of the Warren Glen paper mill to Custom Papers and the sale of the landfill to Crown Vantage, Inc. (Crown). As a result of this transaction, Crown succeeded to James River's right to have the landfill's leachate flow into the paper mill's treatment lagoons, and Custom Papers succeeded to the right to use the landfill and the obligation to accept the landfill's leachate into the mill's treatment lagoons. Plaintiff FiberMark purchased the stock of Custom Papers in October 1996, and it succeeded to these same rights and obligations, the right to deposit waste in the landfill and the agreement to accept the landfill's leachate into its treatment lagoons.

Some time after the sale to Crown, the landfill ceased accepting any new waste; the record does not contain a precise date upon which this happened nor does it explain how the operators of the Warren Glen mill disposed of its waste after this occurred.

Approximately six years after Crown purchased the landfill, it filed for bankruptcy protection in the Northern District of California. As part of those bankruptcy proceedings, it filed a motion under 11 U.S.C.A. 554 to abandon its interest in this landfill, as well as several others that it owned and operated. The DEP objected to this abandonment because of the potential risks to the environment posed by abandoned landfills. To secure the DEP's agreement to this motion, Crown agreed to pay $1 million to the DEP to be used "to investigate, close, clean-up, or otherwise remediate any environmental condition on any and all property" of Crown in New Jersey. Based upon this payment, the DEP withdrew its objection to the motion, and the bankruptcy court entered an order on March 2, 2001, authorizing the abandonment of this property. The order entered by the bankruptcy court simply referred to abandoning the property and did not mention the 1991 agreement that structured the manner in which the landfill was to operate, nor did it convey title to the underlying land.

Following entry of that order, the DEP used a majority of the funds from Crown to close up another of Crown's landfills that it considered to require immediate attention. The DEP did no more with the Warren Glen landfill than to periodically visit it and to mow the grass to keep it from becoming overgrown.

FiberMark proved no more successful in its business operations than had Crown, and in 2004 FiberMark filed for bankruptcy protection in Vermont. As part of those bankruptcy proceedings, FiberMark filed a motion under 11 U.S.C.A. 365(a). It reasoned that Crown, which had had the contractual right to have leachate from the landfill treated at the mill's treatment lagoons, had abandoned the landfill. Accordingly, FiberMark, by its motion, sought authorization to reject the 1991 agreement under which, as the operator of the Warren Glen paper mill, it was obligated to accept into its treatment lagoons the leachate from the Warren Glen landfill. This motion was granted on June 23, 2005. The DEP was not notified of FiberMark's bankruptcy filing or its motion under 365(a) of the bankruptcy code and thus interposed no objection.

FiberMark continued to operate the paper mill for a period of time despite the bankruptcy filing. These operations necessitated maintenance of the treatment lagoons and, despite the June 23, 2005, order of the bankruptcy court, leachate from the landfill continued to flow without objection into the mill's lagoons and, after treatment, into the Musconetcong River under the mill's NJPDES permit.

FiberMark eventually determined, however, in or around November 2005 that it was no longer economically viable to operate the paper mill and began to explore shutting it down and disposing of it and its equipment. Closing the mill of necessity involved closing the treatment lagoons into which leachate from the landfill was continuing to flow.

FiberMark did not immediately contact the DEP about its plans, and the DEP learned of them through newspaper reports in early 2006 and began the process, internally, of considering how to proceed. In April 2006, the DEP hired a consulting team formed by The Louis Berger Group, Inc. and Sadat Associates, Inc. ("Berger/Sadat") to investigate conditions at the Warren Glen landfill, with a particular focus on the potential for erosion, the condition of the landfill's cap, which appeared to contain cracks, and leachate from the landfill.

FiberMark meanwhile explored how to obtain the greatest value for the Warren Glen plant and its equipment, some of which had been installed fairly recently at great expense. As part of the corporate transactions outlined above, FiberMark had also become the owner of the Hughesville paper mill, and it arranged the sale of that property to International Process Plants and Equipment (IPPE), which planned to dismantle the mill and sell the land for real estate development. FiberMark explored the same avenue for the Warren Glen mill, but the fact that the landfill's leachate was continuing to flow into the mill's treatment lagoons even after manufacturing ceased at the plant in June 2006 proved to be a significant stumbling block.

By letter dated June 7, 2006, FiberMark notified the DEP of the plant's imminent closure and demanded that the leachate flow be stopped. This letter stated in pertinent part:

You must cease immediately dumping on our property. We are no longer operating this mill, and we cannot continue treating your waste.

 

You do not have permission to allow leachate or any other form of pollution to flow onto or otherwise pollute FiberMark property, and this needs to cease immediately. As I mentioned, the facility will be fully closed on June 9th.

 

FiberMark did not receive a response to its letter and sent a similar demand on June 20, 2006. Again, it did not receive a response.

In August 2006, Berger/Sadat, having completed its inspection of the landfill, submitted a draft work plan to the DEP, the bulk of which concentrated on the risk of erosion and the condition of the landfill's cap. With respect to the flow of leachate, it simply noted that it had collected samples and sent them off for analysis and that once the results were received, "potential treatment/disposal options will be evaluated and presented."

By letter dated August 22, 2006, the DEP finally responded to FiberMark. It noted that since the leachate flowed into the treatment lagoons through gravity, it was not possible simply to cut off the flow. The letter stated in pertinent part:

Although we understand that you are mothballing the [plant], an alternative to the Fibermark lagoons is not readily available. The leachate collection system for the [landfill] as designed by Fibermark's predecessor, discharges into Fibermark's treatment lagoons. This operation has continued since the construction of the landfill including all during Fibermark's tenure. The NJDEP views that Fibermark is responsible for the storage and treatment of the leachate from the [landfill].1

 

The NJDEP acknowledges your desire to cease operations of your [plant] and that operating the lagoons for only the leachate from the [landfill] could be burdensome for Fibermark. Prior to your initial notice [dated] 7 June 2006, we had initiated an investigation for alternatives for leachate disposal. However, the leachate collection system is a gravity fed system with no options for diverting or halting the discharge. We have hired a consultant to investigate potential options. However, the review of alternatives, the selection of a preferred option, and its implementation could easily last 12 months. Please be assured that the NJDEP is working to seek an acceptable alternative to the current design.

 

FiberMark was not satisfied with this response. It responded by letter dated August 24, 2006, stating its position that it had no contractual obligation to treat the landfill's leachate. It noted the June 23, 2005, order of the bankruptcy court in Vermont authorizing it to reject the 1991 contract. It also noted that the continued flow of the landfill's leachate into the treatment lagoons was costing FiberMark significant expense because it was obligated to continue to operate the treatment lagoons, and it was seeking compensation for that expense. FiberMark estimated that it was spending approximately $86,000 per month to operate these treatment lagoons. Its calculations included necessary supplies, personnel, security, utilities, taxes and fees.

FiberMark and the DEP continued to exchange correspondence, FiberMark demanding the leachate flow be stopped, the DEP responding that it was considering how to proceed. In November 2006, the DEP told FiberMark that it was proposing an interim solution, which involved building an interceptor trench to temporarily divert the leachate back to the landfill while a more permanent solution was developed. Work began in early December on the interceptor trench, and in an e-mail sent on December 21, 2006, the DEP told FiberMark that it anticipated that the work would be completed by January 12, 2007.

On January 8, 2007, FiberMark and IPPE, the entity that had purchased the Hughesville mill, signed an agreement giving IPPE an exclusive option to purchase the Warren Glen mill for $2.25 million plus fifty percent of whatever IPPE received for selling the plant's equipment. IPPE had sixty days within which to exercise its option but indicated to FiberMark that stopping the leachate flow was critical to its decision.

Unbeknownst to FiberMark, the DEP had learned through excavation of the proposed diverter trench that the leachate flowing from the landfill was significantly greater in quantity than had been estimated. The DEP concluded that the landfill would be unable to accept the volume that would flow back to it under this plan, and on January 9, 2007, the day after IPPE signed the exclusive option, the DEP told FiberMark that it had stopped work on the diversion plan and was "discussing options about what to do" in its stead.

FiberMark responded by letter, inquiring why the DEP could not collect the leachate and move it by tanker truck to another location or why it could not be simply discharged into the river. The DEP informed FiberMark without explanation that those were not viable options and that anyone responsible for permitting the leachate to flow directly into the river was subject to significant fines.

With the leachate issue unresolved, IPPE decided not to exercise its option to purchase the Warren Glen plant from FiberMark, and FiberMark filed suit in federal court, seeking a temporary restraining order to enjoin the DEP from discharging leachate into Warren Glen's treatment lagoons. On March 9, 2007, the federal district court entered a temporary restraining order that restrained the DEP "from further discharging leachate, pollutants or waste water on to plaintiff's property." The restraining order also included the following caveat:

. . . the Court and all parties understand that despite the immediate relief Ordered, it is neither practical nor possible for defendant to immediately comply with the Temporary Restraints herein. It is therefore FURTHER ORDERED that the defendant shall, with all possible speed, put in place measures necessary to comply with this Order.

 

On April 12, 2007, just more than a month from the entry of that temporary restraining order, the DEP removed the pipe that had run from the landfill to the treatment lagoons, thus permanently cutting off the flow of leachate from the landfill to FiberMark's treatment lagoons. FiberMark later withdrew its federal action.

With the leachate issue resolved, negotiations resumed between FiberMark and IPPE, and in October 2007, they signed a contract for the sale of the Warren Glen mill. The price, however, was for significantly less than the price stated in IPPE's earlier option. Under the October contract, IPPE agreed to pay FiberMark a total of $1.2 million, $400,000 of which was allocated to the land and buildings, $800,000 of which was allocated to the equipment. This was $1.85 million less than FiberMark would have received if IPPE had exercised its option. In addition, the October 2007 contract contained no provision for a division of the proceeds received upon the sale of the plant's equipment.

In May 2008, FiberMark filed this action seeking damages from the DEP for the continued leachate flow. Its complaint contained four counts -- inverse condemnation, continuing trespass, continuing private nuisance and continuing dangerous condition. The matter proceeded to trial in May 2009, and plaintiff presented three witnesses. John E. Hanley, FiberMark's chief financial officer, testified with respect to the historical background, FiberMark's efforts to sell the plant and the expenses it had incurred in keeping the treatment lagoons operational. Craig W. Wallace, a site manager with the DEP, testified with respect to the DEP's efforts to resolve the problem of the leachate flow. Richard W. Engel, Esq., a deputy attorney general, testified with respect to his communication to FiberMark about its exposure to fines and penalties if it interfered with the flow of leachate into the treatment lagoons.

At the conclusion of plaintiff's case, the trial court granted the DEP's motion under Rule 4:37-2(b), and it later denied plaintiff's post-trial motion. This appeal followed.

In granting the DEP's motion, the trial court set forth its conclusion that the DEP had succeeded to Crown's contractual right to have the landfill's leachate flow into the paper mill's treatment lagoons. It also concluded that FiberMark had not presented a prima facie case under any of the four causes of action it had pled. FiberMark objected to the trial court's analysis, stressing that neither party had litigated the matter under contract principles and that the DEP had never defended the matter on the basis of a contractual right. It also argued that the trial court had not conducted a proper analysis under the principles governing Rule 4:37-2(b) because it had not viewed the evidence most favorably from FiberMark's perspective. Dolson v. Anastasia, 55 N.J. 2, 5-6 (1969). FiberMark repeats those arguments on appeal.

With respect to the latter contention, we are constrained to agree. We note, for instance, that in its oral opinion granting the DEP's motion, it appeared to chastise FiberMark for the procedure it employed in the Vermont bankruptcy, in not notifying the DEP of its motion, in contrast to the procedure utilized by Crown in its bankruptcy proceedings, when it notified the DEP of its motion. While that conclusion might ultimately prove correct, FiberMark was entitled, at that juncture of the case, to rely upon the order of the bankruptcy court.

Further, the orders were entered under different provisions of the bankruptcy code. Crown sought relief under 554 of the code, which permits the abandonment of "any property of the estate that is burdensome to the estate or that is of inconsequential value and benefit to the estate." 11 U.S.C.A. 554. A debtor's power of abandonment, however, is limited.

The Bankruptcy Court does not have the power to authorize an abandonment without formulating conditions that will adequately protect the public's health and safety. . . [A] trustee may not abandon property in contravention of a state statute or regulation that is reasonably designed to protect the public health or safety from identified hazards.

 

[Midlantic Nat'l Bank v. N.J. Dep't of Envtl. Prot., 474 U.S. 494, 506-07, 106 S. Ct. 755, 762, 88 L. Ed. 2d 859, 869 (1986).]

 

It is not sufficient merely to invoke the specter of environmental consequences to defeat an abandonment motion under 11 U.S.C.A. 554. Four elements must be demonstrated.

(1) an identified hazard exists that poses a risk of imminent and identifiable harm to the public health and safety;

 

(2) abandonment of the property will violate a state statute or regulation;

 

(3) the statute or regulation being violated is reasonably designed to protect the public health and safety from imminent and identifiable harm caused by identified hazards; and

 

(4) compliance with the statute or regulation would not be so onerous as to interfere with the bankruptcy administration itself.

 

[In re St. Lawrence Corp., 248 B.R. 734,

739 (D.N.J. 2000) (citing Midlantic, supra, 474 U.S. at 506-07,106 S. Ct. at 762, 88 L. Ed. 2d at 869).]

 

If an entity such as the DEP objects to a bankrupt abandoning property because of environmental factors, it has the burden of establishing the elements necessary to justify, under Midlantic, supra, a limitation on the power to abandon. Id. at 741.

FiberMark, however, did not file its motion under 11 U.S.C.A. 554, but under 11 U.S.C.A. 365(a), which sets forth the parameters under which a debtor's executory contract may be accepted or rejected. Our research has not led to a reported case applying the Midlantic, supra, principles to a 365(a) motion. We stress that we do not determine whether such principles might be appropriately invoked but simply that the issue was not one to be resolved against FiberMark under Rule 4:37-2(b).

Having found that the DEP had a contractual right to have the leachate flow into the Warren Glen treatment lagoons, the trial court went on to find that the DEP had acted reasonably once it learned that the Warren Glen mill was closing. While that conclusion might have been reached at the end of the trial, the trial court, by deciding the issue as it did, did not afford plaintiff the benefit of all favorable inferences, as is required in deciding a motion under Rule 4:37-2(b). Plaintiff should have been permitted to argue to the jury that the DEP acted unreasonably and took an unreasonable length of time to resolve the leachate question.

In its post-trial motions, plaintiff argued that even if the court's contract analysis were applied, it should have been permitted both to amend its complaint to assert a contract claim and to proceed on its damages claim. The trial court denied both motions. While we agree with the trial court that there would be no basis to permit plaintiff, after the dismissal of its action, to amend its pleadings and start anew, we are of the view that plaintiff should have been permitted to proceed, on a limited basis, with its damages claims. In its post-trial motion, plaintiff argued that it should be permitted to seek, in addition to its other damage claims, reimbursement for the costs it incurred in continuing in operation the treatment lagoons.

The trial court rejected this claim on several grounds. It said that plaintiff had not identified that claim previously and should not be permitted to assert it at that point. We are not persuaded by that in light of the fact that neither party had proceeded under contract principles until the trial court decided the Rule 4:37-2(b) motion.

The trial court also rejected the claim because plaintiff had not asserted it after the 2001 order permitting abandonment of the landfill and thus seemingly acquiesced in the continued leachate flow. First, there is no indication in the record that FiberMark or its predecessor was notified of the abandonment motion. Further, there is no indication in the record that the continued flow of the leachate caused any additional expense to FiberMark so long as the Warren Glen mill continued in operation. Once plaintiff wanted to close the mill, and the treatment lagoons, continued leachate flow did cause an additional expense to plaintiff.

The trial court also rejected this aspect of plaintiff's claim on the basis that the original contract with James River made no provision for payment of such expenses. The contract did, however, include such a provision. It stated:

If treatment of the Leachate causes the Warren Glen Operator to incur costs of operation of the Treatment Lagoons which [it] would not otherwise have incurred, the Warren Glen Operator may, upon presenting demonstrable evidence of such additional costs and giving 90 days prior notice, charge James River for those additional costs. In such a notice, the Warren Glen Tenant shall state the basis for the additional costs and provide an accounting thereof. James River shall have the right to review the records of such an accounting. Any payments by James River under this paragraph 8.(c) shall be included in the costs of operations on which the tipping fees to be paid under paragraph 7 shall be based.

 

We concur with the trial court's analysis of one portion of plaintiff's damage claim, in which it sought compensation from the DEP for the fact that the October 2007 contract with IPPE had a lesser value than IPPE's January 2007 option. Plaintiff's own witness, Hanley, testified that when the DEP notified FiberMark in December 2006 that the diversion pipe would be completed by January 12, 2007, plaintiff viewed it as "Another delay, another promise, another wish, another hope. Not a lot of confidence that it will get done." Despite that expressed "lack of confidence," plaintiff proceeded to execute the option agreement. Further, immediately after the DEP decided the diversion pipe was not a viable method, and prior to the expiration of IPPE's option, the DEP proposed taking over Warren Glen's NJPDES permit, under which it would be responsible for the discharge into the river. Plaintiff never pursued that avenue and provided no explanation in the record for not doing so.

Finally, we note for the sake of completeness that we do concur with the majority of the trial court's analysis with respect to the four claims plaintiff had included in its complaint. With one exception, we agree they were properly dismissed. We discuss each briefly in turn.

The Restatement (Second) of Torts 158 (1965) defines trespass in the following manner:

One is subject to liability to another for trespass, irrespective of whether he thereby causes harm to any legally protected interest of the other, if he intentionally

 

(a) enters land in the possession of the other, or causes a thing . . . to do so, or

 

(b) remains on the land, or

 

(c) fails to remove from the land a thing which he is under a duty to remove.

 

Here, the State did not "cause" the leachate to flow into plaintiff's treatment lagoons. The leachate flowed into those lagoons as a consequence of the design and construction of the landfill by its original owner. Plaintiff's theory of trespass was inapplicable.

Plaintiff sought damages under the theory that the leachate flow from the landfill represented a continuing dangerous condition of public property under N.J.S.A. 59:4-2. Public property for purposes of the statute is "property owned or controlled by the public entity." N.J.S.A. 59:4-1(c). Plaintiff did not contend the DEP "owned" the landfill but did contend that as a result of the Crown bankruptcy order, it "controlled" the landfill. Plaintiff relied upon Posey v. Bordentown Sewerage Authority, 171 N.J. 172 (2002), for the principle that a public entity could be responsible for a dangerous condition that exists on private property if it was proximately caused by the entity's activities on public property. In Posey, however, the activities that ultimately led to the conclusion that the entity could be held responsible were activities that were undertaken for a public purpose, to facilitate public drainage. Here, the DEP took no action with respect to the leachate or the landfill other than to mow the grass.

Even apart from that, plaintiff's proofs were insufficient to establish all the required elements under N.J.S.A. 59:4-2. The record would not support a finding that the actions of the DEP created a "dangerous condition" on FiberMark's property. As the trial court noted, there was no proof that the leachate was hazardous or dangerous, simply that it may have required treatment to permit its discharge into an environmentally sensitive body of water such as the Musconetcong River. The trial court correctly rejected this claim.

We also agree that plaintiff's claim of inverse condemnation was similarly unavailing. An inverse condemnation claim is based on fundamental constitutional protections against the government's taking of private property for public use without just compensation. See U.S. Const. amend. V; N.J. Const. art. I, 20; N.J. Const. art. IV, 6, 3. A constitutional taking may occur in one of two ways: (1) a physical taking, wherein the government takes title to or authorizes a physical occupation of private property; or (2) a regulatory taking, wherein a government regulation deprives the property owner of all economically viable use of their land. Klumpp v. Borough of Avalon, 202 N.J. 390, 405 (2010) (citations omitted). If such a taking has occurred, the government must compensate the property owner. Ibid.

Typically, when the government seeks to exercise its power of eminent domain, it will first institute a condemnation proceeding in accordance with New Jersey's Eminent Domain Act, N.J.S.A. 20:3-1 to -50. Id. at 405-406. If, however, the government seizes private property without first bringing a condemnation proceeding, then the burden shifts to the property owner to bring an action to compel compensation from the government, which is known as "inverse condemnation." Id. at 406 (citations omitted). This type of action is not a tort claim and is thus not subject to the requirements and immunities of our tort claims statute. See Greenway Dev. Co. v. Borough of Paramus, 163 N.J. 546, 557 (2000).

In general, in order to prevail on an inverse condemnation claim, the plaintiff must allege some "activity in the nature of a taking or an attempt to take on the part of the State of New Jersey." Kenney v. Scientific, Inc., 204 N.J. Super. 228, 240 (Law Div. 1985). That is, "[s]ome kind of action on the part of an entity cloaked with the authority to condemn is a prerequisite for invoking the doctrine of inverse condemnation." Id. at 240 (citations omitted) (finding no activity in the nature of a taking on the DEP's behalf for allegedly failing to regulate a privately owned and operated landfill that leached toxic waste onto plaintiffs' property).

Plaintiff failed to present any evidence of an affirmative action by the DEP that constituted a taking of plaintiff's property for a public purpose, and the trial court properly dismissed its inverse condemnation claim.

Plaintiff's remaining claim was that of nuisance. In Birchwood Lakes Colony Club, Inc. v. Borough of Medford Lakes, 90 N.J. 582, 592 (1982), the Supreme Court adopted the formulation of a private nuisance set forth in Restatement (Second) of Torts 822 (1979):

One is subject to liability for a private nuisance if, but only if, his conduct is a legal cause of an invasion of another's interest in the private use and enjoyment of land, and the invasion is either

 

(a) intentional and unreasonable, or

 

(b) unintentional and otherwise

actionable under the rules controlling

liability for negligent or reckless

conduct, or for abnormally dangerous

conditions or activities.

 

The DEP could, as a general principle, only be liable for the leachate flow as a private nuisance if it was "caused by [its] negligent or reckless conduct." Birchwood Lakes, supra, 90 N.J. at 591.

There is authority for the proposition that a party who did not create or contribute to a condition may be liable under principles of nuisance if it had a duty to "prevent or abate" the condition. Id. at 592. Plaintiff was entitled to argue that the DEP, by accepting Crown's $1 million, and agreeing to "remediate any environmental condition" on Crown's property, accepted the duty to abate the flow of leachate into plaintiff's treatment lagoons. Whether the steps taken by the DEP with respect to the leachate flow were reasonable was not an issue that could be resolved adversely to plaintiff in the context of a motion under Rule 4:37-2(b).

We thus affirm the trial court's order in part, reverse in part, and remand for further proceedings.

1 According to the record before us, the landfill was designed by James River, which was not FiberMark's corporate predecessor.