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Bahrle v. Exxon Corp.

July 9, 1996

DAVID BAHRLE, IDA BAHRLE, MICHAEL BAHRLE, STEVEN BAHRLE, WILLIAM BAHRLE, PATRICIA M. BAHRLE, STEVEN AND PATRICIA M. BAHRLE AS GUARDIANS AD LITEM FOR KYLE BAHRLE, A MINOR, KAREN BENHAM, MICHAEL BENHAM, MICHAEL BENHAM, AS GUARDIAN AD LITEM FOR CARLEY BENHAM, AND MICHAEL C. BENHAM, MINORS, DONNA BERGMANN, KENNETH BERGMANN, KENNETH BERGMANN, AS GUARDIAN AD LITEM FOR JASON BERGMANN AND MICHAEL BERGMAN, MINORS, ELIZABETH BETZ, LAWRENCE BETZ, JR., CAROLE A. BRILLY, KATHLEEN BRILLY, MARYBETH BRILLY, PATRICK J. BRILLY, CAROLE A. BRILLY, AS GUARDIAN AD LITEM FOR PARTICIA B. BRILLY, A MINOR, RUTH CERVASIO, THOMAS CERVASIO, HILARY DONOHUE, ROBERT M. DONOHUE, ROBERT M. DONOHUE, AS GUARDIAN AD LITEM FOR DAWN DONOHUE, MERRILEE DONOHUE AND TIFFANY DONOHUE, MINORS, DOROTHY FORTUS, JOHN S. FORTUS, PATRICIA D. FORTUS, STEPHEN J. FORTUS, DEBRA A. FRIERMUTH, NEIL ALAN FRIERMUTH, SHERRY A. FRICK, THOMAS D. FRICK, THOMAS AND SHERRY FRICK, AS GUARDIANS AD LITEM FOR ATRINA FRICK, A MINOR, DAVID GALLINA, ELLEN GALLINA, ELLEN GALLINA, AS GUARDIAN AD LITEM FOR KAREN GALLINA, AND KRISTINE GALLINA, MINORS, ANDREW GLATZ, BERTHA GLATZ, FREDERICK A. GLATZ, PAUL T. GLATZ, CHERYL D. HEDBERG, JOHN A. HEDBERG, CHERYL D. HEDBERG, AS GUARDIAN AD LITEM FOR DERRICK HEDBERG, JOHN HEDBERG, AND MICHELE HEDBERG, MINORS, NORA HENNESSEY, MARIE HOWLEY, ELLEN KLEIN, JOSEPH S. KLEIN, PATRICIA ANN KLEIN, JOSEPH S. KLEIN, AS GUARDIAN AD LITEM FOR THERESA KLEIN, A MINOR, DALE R. KNOTT, DENISE L. KNOTT, IRENE G. KNOTT, GEORGE T. LEARY, III, JUDITH A. LEARY, JUDITH A. LEARY, AS GUARDIAN AD LITEM FOR SEAN A. SCANLON AND TARA B. SCANLON, MINORS, JEAN LUZETSKY, JOHN J. LUZETSKY, ROBERT J. LUZETSKY, JOHN AND JEAN LUZETSKY AS GUARDIANS AD LITEM FOR JANENE LUZETSKY, A MINOR, WILLIAM J. MAGYARITS, ELAINE MANGAN, GRACE MANGAN, JUDITH MANGAN, MICHAEL G. MANGAN, SR., PETER MANGAN, WILLIAM MANGAN, WILLIAM MANGAN, AS GUARDIAN AD LITEM FOR CHRISTOPHER MANGAN, NOAH MANGAN, PATRICK MANGAN AND WILLIAM MANGAN, JR., MINORS, ELAINE MANGAN, AS GUARDIAN AD LITEM FOR MICHAEL MANGAN, JR. AND TARYN MANGAN, MINORS, ELLEN MARANO, SALVATORE MARANO, DENNIS MCCORY, DIANE B. MCCORY, ELEANOR MCCORY, DENNIS MCCORY, AS GUARDIAN AD LITEM FOR KATHLEEN MCCORY, A MINOR, CAROL ANN MCMAHON, PATRICK. L. MCMAHON, DORIS MEEHAN, JAMES J. MEEHAN, JOHN V. MEEHAN, MILDRED J. MEEHAN, VINCENT T. MEEHAN, JOHN V. AND MILDRED J. MEEHAN, AS GUARDIANS AD LITEM FOR JOHN J. MEEHAN, A MINOR, MICHAEL A. METELSKY, ANITA J. O'BRIEN, THOMAS E. O'BRIEN, CHARLES OBRZUT, STELLA OBRZUT, LUCILLE PETERS, ESTATE OF HELMUTH PETERS, HAZEL F. PERTERSON, ROBERT PETERSON, ROBERT PETERSON, AS GUARDIAN AD LITEM FOR CHRISTINE PETERSON, A MINOR, CATHLEEN PETRIN, NICHOLAS PETRIN, STEFFANY PETRIN, TIMOTHY PETRIN, JOSEPH PINO, LINDA PINO, LINDA PINO, AS GUARDIAN AD LITEM FOR ANGELA CAPUTO AND JOSEPH CAPUTO, MINORS, JOAN PONTICELLO, MATTHEW PONTICELLO, JOAN PONTICELLO, AS GUARDIAN AD LITEM FOR RENE PONTICELLO AND TINA PONTICELLO, MINORS, CATHRYN POPP, ANGELA RIZZO, ANTHONY RIZZO, CHRISTINE RIZZO, GENE J. SANTUCCI, JUDITH ANN SANTUCCI, JUDITH ANN SANTUCCI, AS GUARDIAN AD LITEM FOR DIANE SANTUCCI, JOSEPH SANTUCCI, MICHAEL SANTUCCI, THERESA SANTUCCI AND TIMOTHY SANTUCCI, MINORS, EDWARD J. SCANLON, HEATHER V. SCANLON, HEATHER V. SCANLON, AS GUARDIAN AD LITEM FOR, CHAD SCANLON, DIERDRE LEARY AND DREW LEARY, MINORS, JAMES F. SMITH, JR., MARGARET SMITH, MARIE SMITH, JAMES F. SMITH, JR. AND MARIE SMITH, AS GUARDIANS AD LITEM FOR DONNA SMITH, A MINOR, RICHARD SPAFFORD, SUSAN SPAFFORD, SUSAN SPAFFORD, AS GUARDIAN AD LITEM FOR RICHARD SPAFFORD, JR., RONALD SPAFFORD AND WENDI SPAFFORD, MINORS, BERTHA B. TIER, JOHN E. TIER, CHRISTOPHER VANDERKAM, MARK E. VANDERKAM, PATRICIA VANDERKAM, EDWARD VANDERKAM, MARK E. VANDERKAM, AS GUARDIAN AD LITEM FOR LYNN VANDERKAM WAGNER, A MINOR, BENJAMIN WEDEKIND, FRANK WEDEKIND, KEVIN WEDDKIND, MARY WEDEKIND, KURT WEDEKIND, PLAINTIFFS-APPELLANTS,
v.
EXXON CORPORATION, A CORPORATION OF THE STATE OF NEW JERSEY DOING BUSINESS AS EXXON CO., USA; INNCO FUELS, INC., A CORPORATION OF THE STATE OF NEW JERSEY; CONWAY AUTO, INC., A CORPORATION OF THE STATE OF NEW JERSEY; RICHARD E. RITCHIE AND SUSAN M. RITCHIE, TRADING AS LACEY EXXON; LACEY TOWNSHIP, A MUNICIPAL CORPORATION OF NEW JERSEY; POINT BAY FUEL, INC., A CORPORATION OF THE STATE OF NEW JERSEY; GARDEN STATE PARKWAY AUTHORITY; JERSEY CENTRAL POWER AND LIGHT COMPANY, A CORPORATION OF THE STATE OF NEW JERSEY; CHARLOTTE W. RULE; KALSCH-FORTE OIL CO., INC., A/K/A K-FORTE OIL CO., A CORPORATION OF THE STATE OF NEW JERSEY; "JOHN DOE" DEFENDANTS B THROUGH Z; "JOHN DOE" DEFENDANTS 4 THROUGH 10; ** "JOHN ROE"; DEFENDANTS A THROUGH Z; "JOHN ROE" DEFENDANTS 1 THROUGH 10, ** RULES TEXACO, INC. DEFENDANTS, AND TEXACO REFINING AND MARKETING INC., IMPROPERLY DESIGNATED AS TEXACO CORPORATION, A CORPORATION OF THE STATE OF DELAWARE; DONALD W. RULE, IMPROPERLY IMPLEADED AS THE ESTATE OF DONALD W. RULE, T/A RULE'S SERVICE STATION, DEFENDANTS-RESPONDENTS.



On certification to the Superior Court, Appellate Division, whose opinion is reported at 279 N.J. Super. 5 (1995).

The opinion of the Court was delivered by Pollock, J. Justices Handler, O'hern, Garibaldi and Coleman join in Justice POLLOCK's opinion. Chief Justice Wilentz and Justice Stein did not participate.

The opinion of the court was delivered by: Pollock

(This syllabus is not part of the opinion of the Court. It has been prepared by the Office of the Clerk for the convenience of the reader. It has been neither reviewed nor approved by the Supreme Court. Please note that, in the interests of brevity, portions of any opinion may not have been summarized).

DAVID BAHRLE, ET AL. V. EXXON CORPORATION, ET AL. (A-34-95)

Argued October 10, 1995 -- Decided July 9, 1996

POLLOCK, J., writing for a unanimous Court.

The primary issue on appeal is whether an oil company should be liable for groundwater contamination because of the activities of an independently-owned and operated gas station that sold the oil company's products. Plaintiffs, residents of Lacey Township, claim that leaks and spills that occurred between 1959 and 1975 at a gas station owned and operated by Donald W. Rule, contaminated their drinking wells.

Between 1959 and 1975, Rule operated his gas station as Rule's Texaco. During that time, Rule sold Texaco products. Kalsch-Forte Oil Co., Inc. (Kalsch-Forte), a distributor of Texaco products, supplied Rule with the Texaco products and installed the underground gasoline storage tanks and other equipment. Kalsch-Forte leased the underground tanks and other equipment to Rule for nominal rent. There was no written agreement between the parties until 1972, when Kalsch-Forte supplied Rule with new underground gasoline storage tanks. At that time, the parties entered into a written "Customer's Equipment Lease," which, among other things, required Rule to maintain the equipment and signs advertising Kalsch-Forte brand products. During the time Rule operated the gas station, Kalsch-Forte distributed products to Rule, except for three to six months during the oil crisis in the 1970's when Texaco directly supplied Rule. Nothing in the record indicates any above-ground spills during the time when Rule operated the station.

In August 1975, Rule sold the station to Richard and Susan Ritchie. Initially, the Ritchies continued to purchase Texaco products from Kalsch-Forte and to operate as a Texaco station. In October 1975, the Ritchies purchased the underground tanks and other equipment from Kalsch-Forte and converted to an Exxon station. The Ritchies installed new underground storage tanks and fuel islands in 1981. One of the tanks that was removed showed signs of extensive corrosion.

In 1984, neighboring residents (plaintiffs) complained of foul-smelling well water. Investigators from the New Jersey Department of Environmental Protection (NJDEP) found gasoline-related contamination in fourteen residential wells. NJDEP identified the Ritchies's gas station as the most likely source and defined a "red line area" in which residential wells were contaminated or threatened with contamination.

Under theories of negligence, nuisance and strict liability, plaintiffs sued Rule and Texaco Corporation, for personal injuries, emotional and mental distress, loss of use and enjoyment of property, and economic and financial harm. The plaintiffs also named Kalsch-Forte, the Ritchies, and Exxon Corporation as defendants. Before trial, plaintiffs dismissed their claims against Kalsch-Forte, which was no longer in business. The trial court granted summary judgment and dismissed most of plaintiffs' claims against Exxon and the Ritchies. Plaintiffs settled the remaining claims with those defendants.

At trial, the court excluded the testimony of plaintiffs' expert as an inadmissible net opinion. At the Conclusion of the evidence, the court instructed the jury that it could find Texaco liable for Rule's negligence if it found that Rule had apparent authority to operate a Texaco station. It further charged the jury that it could find Texaco strictly liable under the Spill Act for leaks in underground storage tanks, if it found that the tanks had leaked and that Texaco owned them. The jury found that Rule was not negligent, that the tanks did not leak, and that Kalsch-Forte, not Texaco, owned them. Consequently, the jury returned a verdict of no cause for all defendants.

On appeal, the Appellate Division affirmed the judgment in favor of Texaco, finding no basis for apparent-authority liability and no private right of action for damages claimed by plaintiffs under the Spill Act. The court also affirmed the Law Division's ruling not to admit the testimony of plaintiffs' expert. The Appellate Division reversed and remanded for retrial the claims against Rule on issues of negligence, nuisance and strict liability. In reversing, the Appellate Division directed the trial court to determine whether operating a gas station is an abnormally dangerous activity under the Restatement (Second) of Torts § 520.

The Supreme Court granted plaintiffs' petition for certification.

HELD:

Texaco Corporation is not vicariously liable for groundwater contamination caused by the activities of an independently-owned and operated gas station that sold Texaco products.

1. The Court affirms the Appellate Division holding that Texaco is not liable under the theory of apparent agency for the reasons expressed in that court's opinion. (p. 17)

2. Ordinarily, an employer that hires an independent contractor is not liable for the negligent acts of the contractor in the performance of the contract. However, an employer is strictly liable for harm resulting from the performance by an independent contractor of abnormally dangerous work. Essential to the application of these rules is the existence of an independent-contractor relationship. Here, plaintiffs' claim against Texaco fails because they failed to prove that Texaco hired Rule as an independent contractor. Rule had no direct relationship with Texaco; he dealt exclusively with Kalsch-Forte. Moreover, neither Kalsch-Forte nor Texaco exercised control over the operation of the service station. Because Rule is not an independent ...


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