The New Jersey Appellate Division recently ruled that a landowner’s lawsuit against a former attorney and environmental consultant could proceed to the discovery phase. In CCM Properties, LLC, et al. v. Pieper, et al, the plaintiff engaged an environmental consultant to perform a ground penetrating radar survey of a property to determine whether any underground storage tanks were present. The contract specifically stated that no historical analysis or soil sampling would be performed, and further stated that the proposed work did not satisfy New Jersey Department of Environmental Protection requirements. The consultant performed the scan, found two USTs, and recommended their proper removal. Despite the fact that an investigation meeting NJDEP requirements had not been performed, plaintiff’s attorney advised that “all issues regarding the purchase of the subject property [were] resolved,” inducing plaintiff to close on the property. Three years later, the bank, upon receiving plaintiff’s refinancing application, commissioned a Phase I report. The Phase I report stated that, in addition to the two discovered USTs, the property once featured another UST and a 250,000 gallon above ground storage tank. The bank denied the refinance application. Three years after the Phase I report, plaintiffs filed suit based upon the findings therein. In particular, plaintiffs leveled a malpractice claim against the attorney for advising them to take title after the ground penetrating radar survey, and malpractice and breach of contract claims against the consultant for failing to advise that further investigation was needed.
Soon thereafter, the defendants moved to dismiss the complaint, claiming that the statute of limitations had expired, and that plaintiff had failed to state a claim. The trial court agreed. The Appellate Division reversed.
The Appellate Division first addressed the attorney malpractice statute of limitations issue. Noting that it is very difficult for lay persons to know that they have been injured until actual damage occurs, the Appellate Division held that plaintiff’s malpractice action did not accrue until it actually received the Phase I report that served as the basis of the bank’s denial. Thus, the six year statute of limitations did not bar the attorney malpractice action. The Appellate Division next turned to the consultant malpractice action, and held that that action was properly dismissed. The Appellate Division observed that the contract precisely circumscribed the consultant’s duties. The contract expressly stated that the ground penetrating radar survey did not meet NJDEP requirements, and imposed no duty to detect and advise of aboveground storage tanks, soil contamination, or prior use of the property. Thus, the consultant malpractice action was properly dismissed.
The breach of contract claim against the consultant however, was not. The Appellate Division noted that, at the initial stages of litigation, the plaintiff’s allegations are treated as true, and that even “obscure statements” that establish a cause of action will overcome a motion for dismissal. In light of the foregoing, the Appellate Division held that the consultant’s failure to find a third UST supported a breach of contract claim, and that that cause of action could go forward.
For those in the market for potentially contaminated properties, this case highlights the importance of sound legal counsel when interacting with consultants and their work product. For consultants, the case highlights the value of good drafting.