Date: February 4, 2019

Recently, in Terranova v. General Electric Pension Trust, __ N.J. Super. __, 2019 WL 149440 (N.J. Super. Ct. App. Div. Jan. 4, 2019), the Appellate Division held that the doctrine of “judicial estoppel” is a valid defense to Spill Act contribution claims. Judicial estoppel is an equitable doctrine that prevents a party from asserting a position inconsistent with one it successfully advanced previously during litigation.  The doctrine protects the integrity of the judicial process.  Because judicial estoppel is an equitable defense created by the Judiciary and not by the Legislature, the Terranova panel reasoned that the defense was not eliminated by the section of the Spill Act that limits defenses to “an act or omission caused solely by war, sabotage, or God, or a combination thereof.”  To reach that conclusion, the panel relied on the Supreme Court’s prior recognition, in Morristown Associates v. Grant Oil Co., 220 N.J. 360 (2015), that the Spill Act does not deprive parties of unlisted defenses established by court rule under the jurisdiction of the Judiciary.

The Appellate Division, therefore, affirmed summary judgment in favor of the Spill Act contribution defendants based on the judicial estoppel defense. Several years prior, the plaintiff arbitrated a Spill Act contribution claim against other parties, contending that those other parties alone were solely responsible for the contamination, a contention that ignored findings by its own expert report that there were potentially other responsible parties.  Having successfully advanced that position and obtained an arbitration award, the plaintiff could not now bring a claim against new defendants for contribution by contending that they were also responsible for the contamination. 

To be sure, the Terranova panel’s decision was couched in terms of the judicial estoppel defense.  But much of the panel’s concluding language and reasoning sounds an awfully lot like application of the entire controversy doctrine: the prospect of judicial estoppel “compels owners to pursue, in a single action, dischargers which are known or reasonably knowable from the circumstances.”  Plaintiffs, the panel continued, are “are precluded from floating a lazy cast toward one discharger and then shooting a second line toward others, seeking contribution for clean-up of the same property.”  Indeed, the panel acknowledged these policy objectives are shared by other doctrines, including the entire controversy doctrine. 

So why was this not an “entire controversy doctrine” case from the get-go? Early on in the decision, the panel waded through the procedural morass of the case, which ultimately led it to the conclusion that the trial court relied only on judicial estoppel to grant summary judgment—though several defendants had also asserted the entire controversy doctrine. It appears, then, that the Appellate Division took something akin to the path of least resistance to reach the same equitable result it likely would have under the entire controversy doctrine. 

In any event, based on Terranova, it is a near-certainty that the “entire controversy doctrine” likewise survives as an equitable defense to a Spill Act contribution claim.  If anything, that equitable doctrine has an even more rock-solid case for survival because it is embodied in Rule 4:30A, and Morristown Associates already held that defenses established by court rule are not subject to legislative abrogation.