Nearly Seven Years After Storm, New Life for Sandy Damages Claim in New Jersey

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A claim for damages from Superstorm Sandy that has been rejected several times by the state of New Jersey got another chance from a divided state Supreme Court on Monday.

In a 4-3 ruling, the high court said an arbitrator who denied the owner of a group of homes in Bayonne compensation for oil damage misread evidence and shouldn’t have excluded expert evidence offered by the property owner. The case will now go back to arbitration.

The decision “provides for potential relief for the many New Jerseyans who are affected when increasingly frequent storms devastate our property, in this instance by leaving oil in its wake,” said Lawrence Lustberg, an attorney representing the property owner, a Maryland real estate investment trust.

The owner first applied for compensation about a month after the storm hit in October 2012, under New Jersey’s Spill Act, which dates back to the 1970s. Employees noted an oil smell and noticed staining on interior walls.

The Department of Environmental Protection twice rejected the application, saying the contamination came from fill used to raise the elevation of the land long ago.

An arbitrator again denied the claim in 2016 based on an expert hired by the department who added that the source was “broadly distributed contaminants, often arising from multiple sources” that pre-dated Sandy.

The owner sought to have the expert’s report excluded, saying it was submitted on the eve of arbitration and contained a new theory. It also sought to have its own expert report submitted. The arbitrator denied both requests.

“Flaws in the substantive reasoning of the arbitration decision as well as procedural fairness considerations undermine confidence in the outcome of this arbitration,” the majority wrote Monday.

A message seeking comment was left with the state attorney general’s office.