Plaintiff retained consultant to abate mold at residence in 2004. Consultant mixed mold disinfectant product with bleach solution per labeling instructions and applied to porous surfaces. Manufacturer indicated that product was suitable for wood surfaces.
Plaintiffs alleged that the mixture started a chemical reaction that produced a variety of carcinogenic and volatile chemicals that were absorbed by wood structures of residence, requiring home to be demolished. Plaintiff sued manufacturer and consultant and home insurer. Plaintiff settled with home insurer.
Insurer of consultant sought declaratory judgment that there was no coverage by virtue of mold exclusion under the Environmental Consultant Professional LIability (ECPL) and Contractor's Pollution Liability (CPL) policies. The Mold, Mildew, Fungus Exclusion endorsement excluded coverage for damage arising out of mold remediation but there was a Microbial Decontamination Limited Coverage Endorsement (MDL) policies.
The court said under Georgia law, exclusions are to be intepreted narrowly and coverage endorsements broadly. The court said that the underlying complaint did not state that their home became inhabitable because of mold release but because of the chemical release as a result of the alleged negligent mixture of the product and bleach. Thus, there was coverage under the ECPL.
Turning to the CPL, the court said the policy coveredpollution incidents caused by performance of covered contracting activities. The court noted that public policy disfavors insurance provisions that permit an insurer to avoid risks for the insurer has been paid and that a reasonable insured expects would be covered. The court said a reasonable insured would expect that chemicals released by a mix of bleach and the product would be covered by the CPL.
The court also rejected claims based on the manufactured goods eclusion under the Covered Professional Activities endorsement as well as the ECPL Endorsement covering Laboratory Analysis,Indoor Air Quality Consulting, Soil Testing and Underground Storage Tank System Testing.
The court also denied insurer's motion for summary judgment on failure to provide notice to insuer within ten days since the facts were unclear when a supervisory employee of the consultant became aware of the pollution incident or when they were aware of an occurance that might result in a claim. Minkoff v Action Remediation, Inc., 2010 N.Y. Misc. LEXIS 4857 (Sup. Ct-Nassau Cty 9/30/10)
Wednesday, March 16, 2011
Washington State Court Finds Seller of Home Who Was Unaware of Leak Heating Oil Tank Does Not Qualify As Innocent Party
Plaintiffs purchase home in 2000 that had 720 heating oil tank. As part of remodeling In 2004, they converted the home to natural gas and remove UST. In 2007, they discover that a return line associated with the former tank had over time leaked significant oil into the soil around the home remodel home. After incurring approximately $200K in cleanup costs, they file lawsuit against seller of home. The trial court denied the plaintiff's motion to dismiss affirmative defenses and the plaintiffs sought review of these pre-trial rulings.
In response to statutory contribution claim under the state Model Toxics Control Act (MTCA), defendant asserts innocent purchaser since they were unaware of the leaking piping and therefore did not contribute or cause the petroleum contamination. However, the court ruled that the phrase did not require knowledge and that an owner is strictly liable even where they unknowingly or unintentionally discharge hazardous substances. Since defendants acknowledged that the fuel oil leaked during the time they operated the heating system, court ruled defendants' were not innocent purchasers.
The defendants also asserted a "domestic use" defense on grounds that residential oil is frequently stored in USTs. However, the court ruled that the domestic use exclusion does not apply to oil leaking from defective underground piping. To hold otherwise, the court said, would do violence to the public policy underlying the MCTA to ensure impose broad strict liability for improper disposal of hazardous wastes.
On a contractual claim, the defendants asserted that the plaintiffs assumed the risk of possible contamination when they failed to object to the UST during their inspection period. The court said the RESPA statement did not expressly allocate MCTA liability and that the Buyers only had a general right of inspection regarding hazardous materials. The court noted that the contingency pertaining to the UST was limited "solely to determining the presence or non-presence of oil storage tanks on the Property, unless otherwise agreed to in writing by Buyer and Seller". The court said the buyer was expresslly prohibited from conducting any testing. The inspection report did not there might have been an abandoned UST in the front yard and the Buyers confirmed with Seller that no such abandoned tank existed. Thus, the court said, the inspection report did not provide the plaintiffs with an ability to terminate the contact. Grey v Leach, 2010 Wash. App. LEXIS 2720 (Ct. App. 12/13/10)
In response to statutory contribution claim under the state Model Toxics Control Act (MTCA), defendant asserts innocent purchaser since they were unaware of the leaking piping and therefore did not contribute or cause the petroleum contamination. However, the court ruled that the phrase did not require knowledge and that an owner is strictly liable even where they unknowingly or unintentionally discharge hazardous substances. Since defendants acknowledged that the fuel oil leaked during the time they operated the heating system, court ruled defendants' were not innocent purchasers.
The defendants also asserted a "domestic use" defense on grounds that residential oil is frequently stored in USTs. However, the court ruled that the domestic use exclusion does not apply to oil leaking from defective underground piping. To hold otherwise, the court said, would do violence to the public policy underlying the MCTA to ensure impose broad strict liability for improper disposal of hazardous wastes.
On a contractual claim, the defendants asserted that the plaintiffs assumed the risk of possible contamination when they failed to object to the UST during their inspection period. The court said the RESPA statement did not expressly allocate MCTA liability and that the Buyers only had a general right of inspection regarding hazardous materials. The court noted that the contingency pertaining to the UST was limited "solely to determining the presence or non-presence of oil storage tanks on the Property, unless otherwise agreed to in writing by Buyer and Seller". The court said the buyer was expresslly prohibited from conducting any testing. The inspection report did not there might have been an abandoned UST in the front yard and the Buyers confirmed with Seller that no such abandoned tank existed. Thus, the court said, the inspection report did not provide the plaintiffs with an ability to terminate the contact. Grey v Leach, 2010 Wash. App. LEXIS 2720 (Ct. App. 12/13/10)
Purchaser of Property With Old Tank Not Eligible for Reimbursement from NY Oil Spill Fund
Purchaser discovered "orphan" UST following closing and remediated contamination. When it filed an application for reimbursement from the NY Oil Spill Fund, the claim was denied on the grounds that the property owner was a "discharger" under the NY Navigation Law and therefore not eligible for reimbursement.
Property owner sought judicial review under Article 78, asserted it was an innocent purchaser because it never used the tank and was not aware of the tank at the time of purchase.
Relying on State v Green, the court upheld the decision of the Spill Fund. The court said that the Navigation Law imposed strict liability and awareness of a tank was not a defense to liability. Moreover, the tank was deemed to be a fixture attached to the property and therefore, owner/petitioner was owner of the tank system. In Matter of Eugene Veltri, 2011 N.Y. App. Div. LEXIS 762 (App. Div-3rd Dept. 2/10/11)
Commentary: While the Oil Spill Fund can be a tool for developers of brownfield sites impacted with petroleum contamination, the Oil Spill Fund takes a broad definition of a "discharger" and that if there is a tank at the site when the developer takes title, it will be considered to be a discharger. Thus, it is essential that due diligence be used to identify historic tanks and would be prudent to have the tanks prior to taking title.
Property owner sought judicial review under Article 78, asserted it was an innocent purchaser because it never used the tank and was not aware of the tank at the time of purchase.
Relying on State v Green, the court upheld the decision of the Spill Fund. The court said that the Navigation Law imposed strict liability and awareness of a tank was not a defense to liability. Moreover, the tank was deemed to be a fixture attached to the property and therefore, owner/petitioner was owner of the tank system. In Matter of Eugene Veltri, 2011 N.Y. App. Div. LEXIS 762 (App. Div-3rd Dept. 2/10/11)
Commentary: While the Oil Spill Fund can be a tool for developers of brownfield sites impacted with petroleum contamination, the Oil Spill Fund takes a broad definition of a "discharger" and that if there is a tank at the site when the developer takes title, it will be considered to be a discharger. Thus, it is essential that due diligence be used to identify historic tanks and would be prudent to have the tanks prior to taking title.
Property Owner May Be "Contributing" to Haz Waste Condition By Denying Access For Remedial Actions
Purchaser found contamination after closing and filed RCRA 7002 action. Defendant brings counterclaim asserting that plaintiff is obstructing remediation by denying access. Court denies plaintifff motion to dismiss on grounds that its obstruction could be construed as active storage of wastes and allowing continued leaching of wastes. Therefore, plaintiff could be actively "contributing" to the hazardous waste condition. Carlson v Ameren Corp., 2011 U.S. Lexis 5997 (C.D.Ill. 1/21/11)
Could be instructive as well for complying with post-closing CERCLA continuing obligations.
Could be instructive as well for complying with post-closing CERCLA continuing obligations.
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