NOT FOR PUBLICATION WITHOUT THE

APPROVAL OF THE APPELLATE DIVISION

SUPERIOR COURT OF NEW JERSEY

APPELLATE DIVISION

DOCKET NO. A-0241-07T20241-07T2

CELANESE LTD., a Texas Limited

Partnership,

Plaintiff-Appellant,

v.

ESSEX COUNTY IMPROVEMENT

AUTHORITY,

Defendant-Respondent.

___________________________________

Argued September 16, 2008 - Decided

Before Judges Wefing, Parker, and LeWinn.

On appeal from Superior Court of New Jersey,

Chancery Division, Essex County, No. C-19-04.

Craig S. Provorny argued the cause for

appellant (Herold and Haines, attorneys;

Anthony J. Reitano, of counsel; Mr. Provorny,

on the briefs).

Michael H. Cohen argued the cause for

respondent (Schwartz Simon Edelstein Celso &

Kessler, attorneys; Stephen J. Edelstein, of

counsel; Mr. Edelstein, Mr. Cohen, and David M.

Farkouh, on the brief).

The opinion of the court was delivered by

WEFING, P.J.A.D.

Plaintiff Celanese Ltd. ("Celanese") appeals from a trial court order granting summary judgment to defendant Essex County Improvement Authority ("Authority") dismissing its complaint. After reviewing the record in light of the contentions advanced on appeal, we reverse and remand for further proceedings.

Celanese was the owner of a large parcel of land in a section of Newark zoned for industrial use. The property consisted of nearly twenty-five acres on both sides of Doremus Avenue, with the Passaic River on its eastern border and Plum Creek, which flows into the Passaic River, on its western and southern sides. The portion of the property abutting the Passaic River was referred to as the East Farm while the portion on the other side of Doremus Avenue was referred to as the West Farm.

For years, the property was used by companies in the chemical industry. From the mid-1920s to the mid-1950s, Texaco used the site as a petroleum distribution facility. Later, Celanese used it as a chemical bulk storage and distribution facility, with underground and aboveground piping linking the parcels on either side of Doremus Avenue. At one point, Celanese manufactured methanol and formaldehyde at the site. As a result of those chemical-related uses, the property was contaminated with a variety of substances, a fact well-known to both parties. In 1986, Celanese entered into an Administrative Consent Order ("ACO") with the New Jersey Department of Environmental Protection ("DEP") for the clean-up of this site.

By the mid-1990s, Celanese began to close down its operations at this site and, having no further use for it, sought to market it. Essex County needed to build a new jail to replace its older facilities and undertook, through the Authority, to locate an appropriate site and construct a new jail. The Authority began to explore the feasibility of using the Celanese tract and retained consultants to advise it with respect to the potential benefits and detriments of the site. In 1995, for example, the Authority received an extensive report from EcolSciences, Inc., which was "intended to identify the presence of potentially contaminated areas of concern" on the property. That report noted that the site was listed on the Comprehensive Environmental Response, Compensation and Liability Information System. It pointed out that the System was a "compilation of USEPA [United States Environmental Protection Agency] known or suspected uncontrolled or abandoned hazardous waste sites [and] may ultimately be placed on the National Priorities List." EcolSciences noted twenty-six areas of potential environmental concerns, including surface water. As to this, its report stated the following:

The primary surface water features of the overall property are Plum Creek, a tidal stream which separates the Praxair and Celanese properties, and the Passaic River, which borders the eastern boundary . . . . Plum Creek flows under Doremus Avenue . . . ultimately discharging into Newark Bay . . . . The majority of surface runoff on the Celanese facility is intercepted stormwater system which directs runoff to the local sanitary sewers . . . . Generally, undirected runoff on the East Farm drains to the Passaic River, while undirected runoff on the West Farm discharges to Plum Creek or percolates into the ground. These drainage systems raise an environmental concern as to the potential for residual soil contamination and potential offsite migration of contaminants attributed to past and current industrial uses of both properties.

The Authority also retained John O. Lasser Associates, Inc. to appraise this land. Lasser's original appraisal was conducted in 1997. It was updated in 1998 and reported an appraised value of $7,088,000 as of March 1998. In May 1998, the Authority's then-counsel wrote to Celanese, enclosing a copy of both the Lasser appraisal and an April 1998 report from the Authority's environmental consultant, Camp Dresser & McKee. The letter transmitted an offer to purchase the property for its appraised value, with the Authority reserving "the right to pursue any legal remedies it may have, now or in the future, arising from any pre-existing environmental contamination to the property." Celanese responded by forwarding an appraisal prepared on its behalf, which concluded that the property had a fair market value of $8,130,000 as of March 1997. The appraisal noted that it had been conducted "as if [the property] were clean of any hazardous material."

The parties had met to discuss the matter, however, even prior to the May 1998 exchange of letters. The record before us, for example, contains an agenda of a meeting held on March 12, 1998, to discuss the Authority's potential acquisition of this site. Those attending included Celanese's in-house counsel and its outside counsel, the Authority's then-executive director, the Authority's environmental attorney, and a representative from Camp Dresser & McKee, the Authority's environmental consultant. The final items on the agenda dealt with groundwater and surface water remediation and listed the following topics to be addressed:

Following a period of detailed, comprehensive negotiations, in which both parties were assisted by counsel and environmental consultants, the parties executed a contract in September 1998 pursuant to which the Authority agreed to purchase the property for $6,400,000, substantially less than the Authority's original offer. In return for the reduction in price, the Authority agreed to assume Celanese's environmental responsibilities.

The contract contained detailed provisions that were specifically drafted in light of the known environmental contamination of the site.

Article 3.2 of the contract provided as follows:

Limitations on Representations or Warranties. PURCHASER ACKNOWLEDGES AND AGREES THAT, EXCEPT AS SPECIFICALLY SET FORTH IN ARTICLES 3.1(a) and 4.2, NEITHER SELLER, NOR ANY AGENT OR REPRESENTATIVE OF SELLER HAS MADE, AND SELLER IS NOT LIABLE OR RESPONSIBLE FOR OR BOUND IN ANY MANNER BY, ANY EXPRESS OR IMPLIED REPRESENTATIONS, WARRANTIES, COVENANTS, AGREEMENTS, OBLIGATIONS, GUARANTEES, STATEMENTS, INFORMATION OR INDUCEMENTS PERTAINING TO THE PROPERTY OR ANY PART THEREOF, TITLE TO THE PROPERTY, THE PHYSICAL CONDITION THEREOF, THE FITNESS OR QUALITY THEREOF, THE VALUE OR PROFITABILITY THEREOF, OR ANY OTHER MATTER OR THING WHATSOEVER WITH RESPECT THERETO INCLUDING, BUT NOT LIMITED TO, THE ENVIRONMENTAL CONDITION OF THE PROPERTY. PURCHASER ACKNOWLEDGES, AGREES, REPRESENTS AND WARRANTS THAT IT HAS BEEN PROVIDED SUCH ACCESS TO THE PROPERTY AND SUCH OTHER MATTERS AND TO INFORMATION AND DATA RELATING TO ALL OF SAME AS PURCHASER HAS CONSIDERED NECESSARY, PRUDENT, APPROPRIATE OR DESIRABLE FOR THE PURPOSES OF THIS TRANSACTION AND, WITHOUT LIMITING THE FOREGOING, THAT PURCHASER AND ITS AGENTS AND REPRESENTATIVES HAVE BEEN GIVEN THE OPPORTUNITY TO INDEPENDENTLY INSPECT, EXAMINE, INVESTIGATE, ANALYZE AND APPRAISE ALL OF SAME, WITHOUT LIMITING THE FOREGOING, EXCEPT AS SPECIFICALLY SET FORTH IN ARTICLES 3.1(a) AND 4.2, PURCHASER ACKNOWLEDGES AND AGREES THAT NEITHER SELLER NOR ANY DIRECTOR, OFFICER, SHAREHOLDER, PARTNER (LIMITED OR GENERAL), MANAGER, MEMBER, EMPLOYEE, AGENT OR REPRESENTATIVE OF SELLER IS LIABLE OR RESPONSIBLE FOR OR BOUND IN ANY MANNER BY (AND PURCHASER HAS NOT RELIED UPON) ANY VERBAL OR WRITTEN OR SUPPLIED REPRESENTATIONS, WARRANTIES, COVENANTS, AGREEMENTS, OBLIGATIONS, GUARANTEES, STATEMENTS, INFORMATION OR INDUCEMENTS PERTAINING TO THE PROPERTY OR ANY PART THEREOF, OR ANY OTHER INFORMATION RESPECTING SAME FURNISHED BY OR OBTAINED FROM SELLER OR ANY AGENT OR REPRESENTATIVE OF SELLER. PURCHASER ACKNOWLEDGES AND AGREES THAT, EXCEPT AS SPECIFICALLY SET FORTH IN ARTICLES 3.1(a) and 4.2, PURCHASER IS PURCHASING THE PROPERTY "AS IS" AT THE DATE HEREOF, INCLUDING, BUT NOT LIMITED TO, THE ENVIRONMENTAL CONDITION OF THE PROPERTY.

Paragraph 3.1(a)(iii) provided that, "Except as set forth in Schedule 3.1(a)(iii), to the best of [plaintiff's] knowledge, no third party personal injury suits (excluding worker's compensation claims) are pending or threatened against [plaintiff] arising from alleged exposure to Contaminants (as hereinafter defined) at or emanating from the Property." Schedule 3.1 (a)(iii) identified the following as a potential claim:

The [EPA] has declared the sediment in the Passaic River/Newark Bay a superfund site, which is also known as the "Diamond Alkali Superfund Site." [Plaintiff] received and answered a CERCLA [Comprehensive Environmental Response, Compensation, and Liability Act ("CERCLA")] 104(e) information request. A company known as Chemical Land Holdings (apparently the successor to Diamond-Shamrock) is subject to a consent order with [the EPA] to study the sediment problem. Chemical Land Holdings asked many parties (including [(plaintiff]) to fund the required study. However, since [plaintiff] is an organic chemical company and the sediment problems are from PCB's, dioxin and metals, [plaintiff] declined to participate.

Article 4 allocated responsibility between the parties for the environmental conditions of the property. In Article 4.2, the Authority acknowledged that it had "investigated all matters relating to the ISRA [Industrial Site Recovery Act] Cases and the ACO and has performed its own sampling and testing of soil and groundwater at the Property." It also acknowledged that Celanese had made available to it all the files of its environmental consultant, Environ, Inc., and appended to the contract a list of those documents.

Article 4.5 of the contract is the focus of the parties' dispute. Subparagraph (a) provided:

Except as set forth in section 4.5(b) below, Purchaser hereby releases and shall defend, indemnify and hold harmless Seller, its predecessors in title which were or are related to Seller as parent, subsidiary, sibling or other affiliated entity, and all prior Owners and Operators (as those terms are defined by Environmental Laws) which were or are related to Seller as parent, subsidiary, sibling, or other affiliated entity, and all of their respective successors, assigns, directors, officers, shareholders, partners (general and limited), members, managers, parent entities, brother/sister entities, agents, and legal representatives from any and all claims, demands, liabilities, actions, suits, debts, causes of action, obligations, controversies, expenses, penalties, fees, accounts, damages, personal injuries, losses, judgments and costs (including attorneys' fees and expert witness fees) of every kind and character whatsoever, in law, equity or otherwise, whether compensatory, consequential or punitive in nature, and whether based upon present or future laws, in tort, contract or any other present or future theory of liability, arising, directly or indirectly, from or related to (1) the presence of Contaminants on or emanating from the Property without regard to the date such Contaminants were first placed or discharged on or about the Property, (2) all obligations contained in the DER, (3) the requirement to or failure to install and maintain engineering controls, (4) the ISRA Cases and the ACO, and (5) all injuries and damages of any kind whatsoever related directly or indirectly to or arising from any of the foregoing.

This language was limited by subparagraph (b) which provided:

Notwithstanding any provisions of Section 4.5(a) above to the contrary, Seller hereby releases and shall defend, indemnify and hold harmless Purchaser, its Commissioners, officers, employees, agents and legal representatives and the County of Essex if it acquires title to the Property from the Purchaser, from any and all claims, demands, liabilities, actions, suits, debts, causes of action, obligations, controversies, expenses, penalties, fees, accounts, damages, losses, judgments and costs (including attorney fees and expert witness fees) asserted by third parties (i) for personal injury arising from alleged exposure to Contaminants prior to the Closing Date, and (ii) resulting from the failure of the Seller to perform the Dowtherm Area Work and active groundwater remediation to the extent required as set forth in article 4.4(a)(i) and (ii).

Further, the contract defined "environmental laws" to include "any and all present or future federal, state and local laws, statutes, ordinances, regulations and executive orders and common or decisional law in any way related to pollution or the protection of human health or the environment."

Additionally, Article 4.6 stated that all the provisions of Article 4 would survive the closing, be incorporated into the deed and "run with the land such that its provisions are binding on Purchaser and any subsequent owners of the Property, jointly and severally, for the benefit of Seller."

Finally, the contract contained the following article:

In interpreting any provision of this Agreement, no weight shall be given to, nor shall any construction or interpretation be influenced by, the fact that counsel for one of the parties drafted this Agreement, each party recognizing that it and its counsel have had an opportunity to review this Agreement and have contributed to the final form of same.

Some five years after the closing, in October 2003, Celanese received a letter from the Environmental Protection Agency ("EPA") which contained the following:

EPA has documented the release or threatened release of hazardous substances, pollutants and contaminants into the six-mile stretch of the river, known as the Passaic River Study Area, which is part of the Diamond Alkali Superfund Site ("Site") located in Newark, New Jersey. Based on the results of previous CERCLA remedial investigation activities and other environmental studies, including a reconnaissance study of the Passaic River conducted by the United States Army Corps of Engineers ("USACE"), EPA has further determined that contaminated sediments and other potential sources of hazardous substances exist along the entire 17-mile tidal reach of the Lower Passaic River. Thus, EPA has decided to expand the Study to include the areal extent of contamination to which hazardous substances from the six-mile stretch were transported; and those sources from which hazardous substances outside the six-mile stretch have come to be located within the expanded Study Area.

By this letter, EPA is notifying [Celanese] of its potential liability relating to the Site pursuant to Section 107(a) of CERCLA, 42 U.S.C.