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State Farm Fire and Casualty v. Timothy Shea

September 28, 2012

STATE FARM FIRE AND CASUALTY COMPANY, A/S/O KIMBERLY DUNBAR ROSSI, PLAINTIFF-RESPONDENT,
v.
TIMOTHY SHEA, DEFENDANT-APPELLANT.
CUMBERLAND MUTUAL FIRE INSURANCE COMPANY, A/S/O TIMOTHY SHEA PLAINTIFF,
v.
KIMBERLY DUNBAR ROSSI, DEFENDANT.



On appeal from the Superior Court of New Jersey, Law Division, Atlantic County, Docket No. L-2718-08.

Per curiam.

NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION

Argued: December 21, 2011 -

Before Judges Cuff, Waugh, and St. John.

At issue in this appeal is the liability of a residential property owner to remediate contamination, which migrated to an adjacent property, caused by an abandoned underground storage tank (UST) on his property. The property owner contends he cannot be considered a responsible party as a matter of law and the trial judge improperly imposed liability on him for pre-existing damage to the neighboring property. We hold that Judge Nugent properly applied the law to the facts as found at trial and not contested on appeal, and affirm.

Kimberly Rossi*fn1 owned the property at 6046 Main Street in Mays Landing from June 1998 to January 2004. During that time, Rossi's property contained a fuel oil storage tank buried beneath her driveway. This tank had leaked and contaminated her property. In 2004, Rossi sold the property to John Schleifer. As a condition of the sale of the house, Rossi removed the UST prior to the closing. Additionally, Rossi agreed to be held responsible for the clean-up of any contamination existing on her former property.

Timothy Shea purchased the property at 6044 Main Street in September 1999. This property is separated from the former Rossi property by a driveway. Prior to purchasing the home, Shea did not conduct a home or environmental inspection. When he viewed the home prior to purchase, he noticed a vent pipe in the backyard. He did not inquire, however, about the purpose of the pipe at any time prior to or following the purchase.

In November 2004, Bill Schmitt, an Associate Director at environmental consulting firm ECC Horizon (ECC), was contacted by State Farm Fire and Casualty Company (State Farm), Rossi's insurance carrier, to investigate the former Rossi property for contamination. His task was to determine the extent of contamination found at the property, develop a remedial strategy, and conduct an age-dating analysis.

A contractor for State Farm, Aqua-tex, had already analyzed the site and discovered underground contamination. Schmitt reviewed the Aqua-tex analysis and concluded the contaminated plume*fn2 may have been caused by a source other than Rossi's driveway tank. He based his conclusion on tests that revealed higher levels of contamination in the backyard of the property than the driveway of the property, under which the oil tank had been located. Upon physical inspection of the property, Schmitt found no evidence of other oil tanks located near the backyard. After reviewing permit records for surrounding properties, Schmitt found that an oil tank existed at Shea's property and had not been removed.

Schmitt directed Aqua-tex to install four monitoring wells throughout Rossi's former property to determine the direction of the groundwater flow and to collect groundwater samples. Schmitt determined from these tests that the groundwater flowed in a southwest and west direction toward the Great Egg Harbor River. All groundwater tests conducted by Schmitt, Aqua-tex, and RedHawk Environmental Consulting, Ltd. (RedHawk) were consistent with this conclusion.

After this groundwater analysis, Schmitt ordered the performance of a ground penetrating radar event to locate any other USTs in the area not visible from the ground surface. The test discovered two USTs: one at Shea's property, and one at Rossi's new property, 6042 Main Street. The parties stipulated that 6042 Main Street was not a source of the contamination.

Following the test, Aqua-tex informed Shea about the existence of the oil tank and advised him to remove it. Shea complied. Shea testified he had no previous knowledge of the tank. He had never used oil heat at the house.

When the tank was removed, oil was found inside it. Due to the shape of the tank and the fact that it had four legs on it, Schmitt "could tell immediately that this actually was an aboveground tank that was buried . . . ." Schmitt further inspected the soil beneath the tank after its removal and discovered fuel odors; he also counted more than twenty-five holes in the tank, indicating the cause of the leak and suggesting the leak of product continued until its removal.

State Farm, as subrogee of Kimberly Rossi, filed a complaint against defendant Shea to recover compensatory damages for the funds it had paid for the reasonable cost of investigation, remediation and restoration of the Rossi property. State Farm contended that fuel oil leaked from the UST on Shea's property and contaminated the rear yard of the property owned by Rossi until 2008. State Farm alleged defendant was negligent and in violation of the New Jersey Spill Compensation and Control Act (the Spill Act), N.J.S.A. 58:10-23.11 to -23.50.

Shea answered denying negligence and liability pursuant to the Spill Act. Shea's homeowner's insurer, Cumberland Mutual Fire Insurance Co. (Cumberland), filed a complaint as subrogee of Shea against Rossi seeking an equitable allocation of Rossi's responsibility for the contamination on the neighboring properties and reimbursement of sums paid by Cumberland to address the contamination. An order dated October 16, 2008, consolidated the complaints. State Farm and Cumberland filed cross-motions for summary judgment, which were denied. Judge Perskie found genuine issues of material facts regarding whether any contamination occurred after Shea purchased his house and whether the plumes of contamination were separate and distinct or commingled, thus requiring denial of both motions.

The case proceeded to trial before Judge Nugent sitting without a jury. At trial, Schmitt testified as an expert in environmental science. He was a state-licensed Subsurface Evaluator and Pre-Qualified Unregulated Heating Oil Tank Professional. By the time of his testimony, he had worked on about 300 residential storage tank cases.

Schmitt testified that the New Jersey Department of Environmental Protection (DEP) required soil remediation when contamination reached a level of 5100 parts per million. Three soil samples taken from the tank cavity after the tank's removal registered results of 35,000 parts per million, 9600 parts per million, and 6000 parts per million. Using pictures of the tank and the tank cavity, Schmitt explained that the oil tank had not been ...


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