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Can an environmental claim be assigned? Increasingly, that is a question that lawyers must confront in the area of environmental law, and it’s a question that is difficult to answer. Owners of environmental property often lack the resources to prosecute valid environmental claims. Therefore, unless those claims are assigned, it is often possible for potential responsible parties to avoid liability and, in the worst instances, for the state or the federal government to end up assuming the cleanup tab. Good reasons exist to support the assignablility of environmental claims. Certainly, it would seem to make sense for environmental claims to be assignable. Yet, because environmental claims are often, at least in part, tort claims, the question of whether they are assignable is not easily answered. PRE-JUDGMENT TORT CLAIMS Pursuant to N.J.S.A. 2A:25-1, titled “Contract and Judgments Assignable; Action by Assignee; Defenses,” all contracts for the sale and conveyance of real estate, and all judgments and decrees recovered in any of the courts of this state or of the United States in actions arising in contract shall be assignable, and the assignee may sue thereon in his own name. Thus, by statute, contracts for real property, judgments from any court and causes of action arising in contract are assignable. So long as an environmental claim fits neatly within these categories, an argument can be made that the claim is assignable. If only it were that easy. Many environmental claims do not readily fit into one of these categories. If, for example, a seller of real property believes that his neighbor contaminated the property prior to the sale, that liability cannot be characterized as a contract for the sale of real property, or as a judgment from any court, or as a cause of action arising on a contract. Rather, such a claim would most likely be based in tort or statutory law. The problem is that tort and statutory law claims may not be covered under N.J.S.A. 2A:25 et seq. The question of the assignablility of environmental claims was considered in Village of Ridgewood v. Shell Oil Company, 289 N.J. Super. 181 (App. Div. 1996). In Ridgewood, the municipal plaintiff sued several gasoline service station owners and operators, alleging that they had contaminated part of the municipal water supply as a result of leaking underground storage tanks and other hazardous releases. After the municipal plaintiff settled with some of the defendants, it assigned its remaining claims to them. As a result, a law firm representing one of the defendant oil companies also represented the former plaintiff municipality in the prosecution of the assigned claims. The Appellate Division held that the dual representation of the municipality and the oil company for the purpose of prosecuting the assigned claims was an actual conflict of interest and, therefore, the law firm was disqualified from representing the municipality. The court also held that the municipality could not assign its pre-judgment tort claim to the defendants and that the defendants did not acquire the rights by subrogation. The court held that a tort claim cannot be assigned prior to judgment, citing numerous prior decisions. Since no judgment had existed in this case, there was nothing that the municipality could legally assign to the oil company defendants. Therefore, the attempt to assign its rights was considered a nullity. Further, the court held that the right to bring an action in the courts of this state is held by an injured person alone, unless that person assigns his rights to someone else, which cannot be done before judgment when the action sounds in tort. Since the oil company defendants were not the injured parties in this case, but rather some of the alleged tortfeasors, an assignment could not succeed. Because the municipality had been fully compensated for its losses under the settlement agreement with the oil companies, the court ruled it had no surviving claims that could be asserted against the remaining defendants. It cited the case of Daily v. Somberg, 28 N.J. 372 (1958), for the proposition that the release of a settling joint tortfeasor also releases nonsettling joint tortfeasors if the consideration results in full compensation or if it is accepted as such. UNCLEAN HANDS The court also rejected the oil company’s claim that they were entitled to pursue an action against the other defendants under a right of subrogation, holding that a right of subrogation does not arise spontaneously. Rather, such a right is created by agreement usually between an insurer and the insured, or by operation of statute or judicial device, to compel the ultimate discharge of an obligation by one who in good conscience should pay it. Subrogation has also been defined as a right intended to achieve justice between the parties. The court held that the one asserting the right cannot profit from his own wrong; he must himself be without fault. Therefore, the court held that parties to a contract may not by their agreement control the principals of equity that govern subrogation to a claim against a third party. Thus, the state of the law as of 1996 was clear. Ridgewoodinformed us that pre-judgment tort claims were not assignable and, to the extent environmental claims could be considered pre-judgment tort claims, it appears they were not assignable. See also Somerset Orthopedic Assocs. v. Horizon Blue Cross and Blue Shield of New Jersey, 345 N.J. Super. 410 (App. Div. 2001), and Integrated Solutions, Inc. v. Service Support Specialties, Inc., 124 F.3d 487 (3d cir. 1997). DIGGING DEEPER At least the possibility of relief from this legal proposition has been advanced in the case of Kimball Int’l Inc. v. Northfield Metal Prods, 334 N.J. Super. 596 (App. Div. 2000). In Kimball, a worker who was injured by a collapsed office chair filed a personal injury claim against the chair manufacturer. In turn, the manufacturer initiated an indemnification action against a successor in interest of one of the chair component manufacturers. The chair manufacturer ultimately settled the claim with the worker and provided him with a partial assignment of its indemnification claim against the component manufacturer’s successor. Predicated in part on the theory that pre-judgment tort claims cannot be assigned, the trial court entered a summary judgment in favor of the successor. The worker appealed and the Appellate Division reversed. The Appellate Court held that the pre-judgment claim was assignable because the contract under which the manufacturer purchased the component part that ultimately became part of the office chair (and that allegedly ultimately failed) was at the root of the chair manufacturer’s indemnification claim. However, the court questioned whether the long-standing prohibition against the assignment of pre-judgment tort claims should continue. The court favorably referred to a 1945 decision in which a court held that a bank’s claim against a bookmaker for money he received from a teller knowing that the teller had embezzled the money was assignable under a predecessor to N.J.S.A. 2A:25-1. In that case, the court had characterized the bank’s claims as quasi-contractual based on a theory of implied promise to prevent one’s inequitable enrichment at the expense of another. The court also favorably cited Werrmann v. Aratusa Ltd., 266 N.J. Super. 471 (App. Div. 1993), in which the Appellate Division held that a person injured in a restaurant who obtained a default judgment against a restaurant owner could have obtained an assignment of the owner’s claim against an insurance broker for negligently failing to renew its liability insurance policy. In a footnote, the Kimballcourt opined that “most recent cases have indicated that the non-assignablility rule applies only to tort claims for personal injury.” The court observed: The limitation of the non-assignablility rule to personal injury claims is consistent with the rule in most other jurisdictions which still maintains some restriction upon the assignablility of claims. SeeRestatement (2nd) of Contract, �317 Comment (1981) (observing that the historic common law rule that a cause of action could not be assigned has largely disappeared. It remains applicable to some noncontractual rights, particularly claims for damages for personal injury). From this discussion in Kimball, it appears that the Appellate Division has placed into question whether the historic prohibition of the ability to assign tort claims should remain in place, especially when applied to tort claims that concern property damage rather then personal injury. LOOK TO PUBLIC POLICY A relaxation of the prohibition appears to be in line with the view taken by other jurisdictions and the current Restatement. Kimballwas a suggestion that the Legislature evaluate whether N.J.S.A. 2:A-25 should be amended to allow for this change. The inability to assign personal injury claims was largely based on the concern that unscrupulous persons might coerce persons who have been injured into making bad decisions, and that such practices might further injure persons who have already been injured. However, it would appear that these public policy concerns have no bearing on the instant issue. Contemporary real estate and environmental law practice in New Jersey now encourages the redevelopment of contaminated property. Therefore, our public policy may now be viewed as implicitly supporting the ability to assign pre-judgment environmental claims. This ability would encourage cleanups by allowing those paying the tab to seek reimbursement from the actual polluter. Sales of contaminated property would be encouraged if possible purchasers knew in advance that they may pursue a claim for cleanup costs in the name of the seller. This purchaser would have all of the legal and equitable rights that the original property owner would have possessed. At the same time, it might make less likely the need for a government-paid cleanup of the property. Perhaps Kimballsuggests that the time to allow for the assignment of pre-judgment environmental claims in New Jersey has arrived. The question now is whether or not the Department of Environmental Protection and our Legislature will support legislation that would amend N.J.S.A. 2A:25-1 to expressly authorize assignment of environmental claims. Any measure that promotes brownfield cleanups and avoids the need to publicly fund site remediations may be worth exploring. The authors are shareholders at Lieberman & Blecher, www.liebermanblecher.com, of Princeton, N.J. Lieberman is a co-author of “New Jersey Brownfields Law,” published by New Jersey Law Journal Books.

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