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Grand St. Artists v. General Elec. Co.

Citation: 29 ELR 21053
No. 96-3774, 28 F. Supp. 2d 291/48 ERC 1214/(D.N.J., 12/18/1998)

The court holds that individual condominium owners may not assert the innocent landowner defense in their Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA) action against the property's former owners. The individual owners initially purchased the property as a partnership. The property was converted into condominium units, and the units were then sold and transferred to the individual owners. The individual owners did not know that the property was contaminated when the property was bought under the partnership, but they knew the property was contaminated at the time the units were sold individually.

The court first holds that the operative dates of acquisition for purposes of establishing knowledge of contamination are the dates ownership of each unit was transferred from the partnership to each individual owner in his or her individual capacity. The plain language of CERCLA § 101(35)(A) indicates that "at the time acquired" refers to the point in time when the defendant became the owner of the facility. This interpretation is consistent with CERCLA's liability scheme. In addition, under New Jersey law, when a partnership acquires title to real property, the partners, as individuals, do not acquire any real property interest in the property. It is only when a partner, in his or her individual capacity, chooses to purchase the real property from the partnership and title is transferred to said individual that he or she can be said to own, in a legal sense, and thus have acquired that real property. Consequently, the court holds that the individual owners are not entitled to the innocent landowner defense because each owner had knowledge of the presence of mercury at the property when title passed from the partnership to the individual. The court also holds that equitable factors will be considered when adjudicating the contribution claim at which point liability will be apportioned.

Counsel for Plaintiffs
Louis Pashman
Pashman & Stein
45 Essex St., Hackensack NJ 07601
(201) 488-8200

Counsel for Defendants
James A. Moss
Herrick & Feinstein
104 Carnegie Ctr., Princeton NJ 08540
(609) 452-3800