Source: http://www.nj.com, January 15, 2016
By: Rebecca Forand
One of the owners of the contaminated former Kiddie Kollege daycare site is not personally responsible for the cleanup, an appellate court ruled Thursday.
In May 2014, a Superior Court judge found the former owner of the site, Accutherm Inc., and current owners Navillus Group and Jim Sullivan Inc. liable for the $6.13 million cost to clean up mercury contamination at the former thermometer factory that later housed a daycare center.
Navillus and Jim Sullivan Inc. filed an appeal of this decision based on three points in the case. An appellate court released its findings this week, affirming the majority of the Superior Court’s original judgement, but remanded the case back to court on two points.
Jim Sullivan Jr., one of the shareholders of Jim Sullivan Inc., argued that he should not be held personally liable for the cleanup. The three-judge appellate court agreed, saying the court “pierced the corporate veil” of Jim Sullivan Inc. by imposing personal liability on James Sullivan Jr.
“Our Supreme Court has recognized as a ‘fundamental proposition that a corporation is a separate entity from its shareholders, and that a primary reason for incorporation is the insulation of shareholders from the liabilities of the corporate enterprise,” the court wrote in its decision.
It also concluded that there was not enough evidence against the defendants to find them liable on a theory of “unjust enrichment” — meaning the court did not find the shareholders of the companies were unjustly enriched at the expense of another.
The court ordered the case back to trial court for these two reversals.
Sullivan Inc. and Navillus also argued that they should not be held liable for damages at the site because they were “innocent purchasers” of the land.
On this point, the court ruled that the evidence showed the defendants were given a mini pollution report before purchasing the property. James Sullivan III, another shareholder of James Sullivan Inc., testified in court that he misinterpreted the report, believing there was no threat to the environment or to the health of individuals.
“We reject the notion that an owner of contaminated property can avoid cleanup responsibility under the Spill Act based on a subjective misunderstanding of a report and the law,” the appellate court ruled.
Accutherm manufactured mercury thermometers at the plant from 1987 or 1988 to 1994, during which time mercury spills and discharges contaminated the site.
Jim Sullivan Inc. bought the building at a tax sale in December 1999.
It leased the building to Kiddie Kollege — a daycare center that cared for children between eight months and 13 years old — from 2004 to 2012.
The building has since been demolished and children that attended Kiddie Kollege began receiving medical monitoring for mercury poisoning in 2012.