Clausen Miller Brings 40 Years of Environmental Litigation to a Successful Conclusion with Dismissal of All Claims

May 9, 2023 / News

Clausen Miller shareholder Christopher Scanlon, a senior partner of Clausen Miller, represented the manufacturer of fiberglass reinforced plastic underground storage tanks (USTs) used by plaintiff property owner to contain the gasoline inventory sold by the lessors in the operation of their gas station businesses. Plaintiff sued our client multiple times over several decades regarding petroleum contamination of its property along with the Nassau County Dept. of Health, New York State, New York State Dept. of Environmental Conservation (DEC), the major franchise gas station across the street, the neighboring property owners, and two lessors of the contaminated property. In 1983, the physical integrity of one of the three USTs installed in plaintiff’s property came into question when an inspection by local authorities revealed that the material of one UST was soft and mushy around the fill ports, and the tank failed a mandatory tightness test leading to removal of the UST from service and from the property. Information pointing to improper addition of cheaper but unregulated and illegal octane booster to the UST proved inconclusive and DEC opened multiple “spills” at the site thereafter, numerous times transposing the specific tank and date of the “spill.” During years of litigation, DEC opened multiple “spills” due to the remaining two USTs frequently failing mandatory tightness testing until they were ultimately removed from service and from the property long before their 30 year warranty expired.

The plaintiff property owner alleged manufacturing and design defects, breach of contract, breach of express and implied warranties, negligence, strict liability pursuant to New York’s Navigation Law, and indemnity for any recovery by New York State for enforcement and clean up costs in addition to significant penalties. In an earlier 2011 action, the first of many brought by the property owner against our client, Chris won summary judgment, obtaining dismissal of all claims based upon careful scrutiny of DEC records and the many tank inspectors involved in order to demonstrate that the contamination of the property was not from the USTs manufactured by our client but was in all likelihood a consequence of other unreported spills, failure to maintain spill prevention and leak detection equipment, and inconsistent and unreliable identification of the source of a spill as the UST itself and its attached equipment rather than the lines through which gasoline is pumped to the dispensers and vapor recovery equipment. Chris also demonstrated that the failure of the latter two USTs was due to improper installation by a third party rather than a problem with or defect in the USTs themselves.

The court allowed re-argument but maintained its prior determination that plaintiff’s indemnity claim was premature as litigation between plaintiff and the state in two separate actions was still ongoing.

In 2021, after New York State actually recovered diverse damages from plaintiff from two long-pending actions, plaintiff reasserted each of the previously dismissed claims in addition to diminution of property value and loss of rent and business income under the guise of indemnification in a new action against our client. The court dismissed the newly asserted claims for lost property value, lost rent, and lost business income, but denied summary judgment and dismissal of plaintiff’s indemnification claims which were no longer premature. The court found fact issues that precluded a determination as a matter of law that our client had no liability and conversely that plaintiff had prima facie shown it suffered damages payable to New York State due to its status as the owner of contaminated property rather than due to any act or omission on plaintiff’s part. Chris moved for re-argument and prevailed, convincing the court that the penalties and fines plaintiff was required to pay to New York State were not due to its status but a consequence of its aggressive refusal to take any action to delineate, monitor, mitigate or remediate demonstrated repeated contamination of the property over a period of decades and, therefore, plaintiff bearing the fault for the penalties could not pass through any of its damages via indemnification regardless why or how those damages arose.

Plaintiff noticed appeals of both the order on summary judgment and order on re-argument dismissing all claims, but the time to perfect any appeal has now lapsed and our client breathed easier knowing that decades of litigation with ever increasing potential damages was finally and fully brought to a successful conclusion by Clausen Miller.

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