Jump to Navigation
Jump to Content

Mid-Monmouth Realty Assocs. v. Metallurgical Indus., Inc.

ELR Citation: 47 ELR 20063
Nos. A-0237-14T2, (N.J. Super. Ct. App., 04/28/2017)

A New Jersey appellate court ruled that an insurance company must indemnify a realty company for soil removal connected to groundwater contamination at one of its properties. By merger, the realty company became the successor in ownership to a property that had been leased to a recycling company. For use in its operations, the recycling company maintained underground and above-ground storage tanks containing various substances. After various complaints of environmental issues, the New Jersey Department of Environmental Protection (DEP) ordered that the site be remediated; the recycling company sought indemnification from its insurer but was denied. Because its lessee was unable to afford remediation, the realty company took responsibility for remediation. To cure the issue of groundwater contamination, the company removed soil to cut off the source of the contamination and performed dewatering. The realtors sought indemnification from the insurance company. The insurers argued that since the DEP never ordered active groundwater remediation it was not required to indemnify the realtors. The appellate court disagreed, holding that soil contamination is property damage and is therefore covered under the insurance policy. Further, DEP is not required to order active groundwater remediation if other methods prove insufficient, as was the case. The order was affirmed.