Deposition of landlord in toxic day care revealed

A Gloucester County real estate broker who acquired a contaminated building and rented it out as a day-care center says he did not believe an environmental cleanup was necessary.

Jim Sullivan III, in court papers, also says he didn't tell the Kiddie Kollege Day Care operators that the building was once a thermometer factory with a history of mercury spills and vapors.

The statements appear in court records and a deposition Sullivan gave to attorneys who represent nearly 100 children who attended the now boarded-up Franklinville day care.

The sworn statements offer Sullivan's first full account, in his own words, of his role in a saga that frightened families with small children and became international news. A 48-page excerpt of his deposition, which was given aloud in front of 13 attorneys at a Haddonfield law office in March 2008, was recently added to the voluminous case file.

Kiddie Kollege abruptly closed July 28, 2006, after New Jersey inspectors discovered the building's new use. The one-story structure, at Delsea Drive and Station Avenue, had been on the state's toxic-site list for years and had never been remediated.

Testing revealed it contained hazardous vapors 27 times the acceptable limit. Mercury beads were detected in cracks and crevices of floors and ceiling joists.

Class-action lawsuits filed on behalf of the children and day-care staff demand payment from Sullivan and local and state government for medical testing. Mercury vapors can cause brain, neurological and kidney dysfunctions, especially in children.

Initially, some children tested positive for elevated mercury levels, but when the results later came back in an acceptable range, state health officials said they doubted the children would be permanently harmed. Long-term effects of their exposure to the toxin, however, are not known.

The first of several trials is scheduled for Feb. 18. It will focus on Sullivan's arguments that he and other family members do not legally own the building.

Family members, through various legal entities and corporations, obtained the building for more than $35,000 through a tax sale, legal maneuvers and foreclosure. But they say discrepancies in the paperwork should void the title. They also say Franklin Township and the state Department of Environmental Protection failed to properly inform them of the contamination, invalidating the deed.

If Superior Court Judge James A. Rafferty agrees, the Sullivan businesses may not be liable for the nearly $1 million in estimated demolition costs and environmental studies the DEP has ordered. The family businesses might also escape liability in the lawsuits of the children.

The township and DEP have admitted mistakes were made, but blame each other and the Sullivan family for what happened. DEP and town attorneys say the judge should hold the Sullivan family businesses accountable, saying they failed to conduct due diligence and irresponsibly converted a toxic site into a day care.

A criminal probe and grand-jury investigation into whether anyone could be prosecuted failed due to insufficient laws. Pending bills in the legislature would prohibit a person from exposing others to environmental toxins and carry jail time.

Sullivan was a licensed broker and the owner of Jim Sullivan Real Estate Services Inc., a prominent local firm, when he and family members took steps in 1999 to acquire the factory.

"It was right across the street from my office and it was an eyesore," said Sullivan, 50, a lifelong Franklinville resident, when lawyers asked why he bought it.

His plans? "Just to convert it to office space and lease it out," Sullivan said.

Sullivan, who is also a residential and commercial appraiser, said that his father, James Sullivan Jr., set up Navillus Group General Partnership for him and his three siblings as part of estate planning. Navillus then bought the tax-sale certificate.

The younger Sullivan said he hired an attorney to prepare the papers, but the name Navillus L.L.C. - not the partnership - appeared on the paperwork.

The error is the basis of Sullivan's arguments to void the title. He says Navillus L.L.C. doesn't exist.

"I'm not sure how that all got confused. I've read in the litigation about all of the confusion of all of that," Sullivan said. He added: "I don't know the legal differences between the two [a partnership and a limited liability corporation]."

Later, the deed was transferred to Jim Sullivan Inc., his father's company, for $1. Though his father became the owner of record and the landlord of Kiddie Kollege, Jim Sullivan III was the one who researched the site, managed the property, dealt with the tenants, supervised renovations, and answered questions when inspectors wondered how the day care had opened without a cleanup or state approval.

When the news of the contamination broke in 2006 and Sullivan was contacted at his Franklinville home, he said he was not involved and referred all questions to his father and his father's lawyer, Richard Hluchan. "I'm not with Jim Sullivan Inc. It's my father you want to speak to," he said. Since then, he has not returned calls. His father also won't return calls.

Hluchan has said the Sullivans believed the building was no longer contaminated when they converted it.

In the deposition, Jim Sullivan III said that he had asked the town and state for information on the property in 2000 and was only given a copy of a 1996 "Mini Pollution Report."

Prepared by the Environmental Protection Agency, the two-page report said the amounts of mercury found in the soil and the air were insignificant. It also said wipe samples of the walls, floors and countertops found mercury contamination above recommended levels in two areas. Droplets of mercury were found on the floor and were emitting vapors.

But Sullivan focused on the conclusion. The last sentence said: "Based on air monitoring, soil sampling and wipe sample analysis and the condition and security of the building and surrounding property, the site does not present an immediate threat to human health or the environment."

Sullivan said he interpreted this to mean the building did not pose a health risk. When asked by lawyers whether he had considered having the property retested, he said no.

When pressed, he explained: "Didn't think there was any need based on the summation in the report."

DEP officials say the 1996 report needs to be read in its entirety because it does not conclude the site was free of contaminants. The state had turned to the EPA for funding because the factory owner had declared bankruptcy and the remediation would be costly. The EPA declined assistance, but inspected the site.

Former DEP Commissioner Lisa Jackson, now the EPA administrator, said when the day care was closed that the 1996 report found the building was safe while it was "secure and vacant." She said: "Everyone who works in real estate knows you need a 'no further action' letter," not a mini report, before a contaminated building can be reopened.

Sullivan says he took his inquiry further when he typed a personal letter in February 2000 and mailed it to the DEP, addressing it "To Whom It May Concern." He said under questioning that he did not send it by certified or registered mail. He said he never got a reply.

"I don't recall," Sullivan said when asked if he ever called the DEP to follow up on the letter.

The DEP says it has no record of the letter.

Lawyers also posed written questions to Sullivan to find out whether he ever informed the day-care operators of environmental problems at the site. He wrote: "The Baughmans were informed by Jim Sullivan Inc. in April or May 2006 that DEP had advised examination of the site for mercury would be required."

Becky and Stephen Baughman were the operators when the day care was closed. They have said they were unaware of the history of the building. Becky Baughman, who worked in the day care and brought her toddler, was pregnant when Kiddie Kollege was shut.