Tenant Not Liable For Inactive UST Shared With Adjacent Property

We have discussed in prior posts that New York courts have broadly construed the definition of a “discharger” under the New York Navigation Law. Even owners of property with inactive underground storage tanks (USTs) have been held liable as “dischargers” despite the fact they may have not known about the tank much less exercised any control over it. However, there are limits to this wide liability net. A recent case explored the outer boundaries of the Navigation Law liability.

C & J Cleaners, Inc., v GACO Fashioned Furniture, Inc. 2011 N.Y. App. Div.LEXIS 5512 (App. Div. 6/28/11) involved a UST that had been located on the plaintiffs’ property known as 274 Hempstead Avenue. A fuel line connected the UST to a building on an adjacent property with an address of 284 Hempstead Turnpike. This building was leased by defendant GACO Fashioned Furniture, Inc. (GACO). However, there was no evidence that GACO had ever used the UST.

In 1972, the father of defendant John Acerra, GACO’s president and sole shareholder, purchased 284 Hempstead Turnpike. At the time of the sale, the property had been held in common ownership with 274 Hempstead Turnpike. The UST was located in a strip of land between the two buildings. The purchase agreement granted the purchaser access to the fuel oil fill line as well as to repair or maintain the fuel oil fill line.

In 1978, the father of plaintiff George Nudelman purchased 274 Hempstead Turnpike subject to the express easement. At the time of the lawsuit, 274 Hempstead was owned by the Estate of George Nudelman. The mother of defendant John Acerra acquired title to the GACO property after her husband died.

In 2006, plaintiff began noticing discoloration on asphalt parking lot from oil from the fill cap of the UST. The plaintiffs asked the defendant to address the UST. After the defendants refused, the plaintiffs filed a complaint against both GACO and John Acerra, asserting a variety of common law claims including trespass and nuisance as well as bringing a claim under the Navigation Law.

The plaintiffs sought a declaratory judgment on the common law claims asking the court to find that the defendants were the owners of the UST and therefore responsible for remediating the contamination. The plaintiffs advanced two theories to support their claim that the defendants were the owner of the UST. First, the plaintiffs said the 1972 agreement had created ownership by way of a prescriptive easement. Second, the plaintiffs argued that the UST was a trade fixture because it was physically connected to the defendants’ leasehold. The defendants responded with a motion for summary judgment.

The trial court said that to establish a prescriptive easement as to the UST, the plaintiff would have to show, by clear and convincing evidence, that the use of the tank was adverse, open, continued and uninterrupted for the prescriptive period. Since the plaintiff had testified that the tank had not been used for 20 years, the trial court said the plaintiffs failed to establish ownership by a prescriptive easement.

Regarding the 1972 agreement, the trial court said the neither defendant had not been a party to the agreement and there was nothing in the agreement that conveyed ownership of the UST or otherwise imposed a maintenance obligation on the defendants. Since the plaintiff had sought declaratory judgment, the trial court said it was not sufficient to simply dismiss the plaintiffs’ cause of action but that it also had to make a ruling on their respective rights. Accordingly, the trial court ruled that the defendants did not own the UST by way of a prescriptive easement or as a consequence of the 1972 contract.

Turning to the Navigation Law claim, the trial court said that to hold a corporate stockholder, officer or employee personally liable under the Navigation Law for a discharge occurring at a site owned or operated by the corporation, the plaintiff must show that the defendant had been directly, actively and knowingly involved in the culpable activities or inaction that led to a spill or that allowed a spill to go unabated.  Since the plaintiff testified that the UST had not been used for 20 years, the trial court said there was no evidence demonstrating that the Defendants knowingly engaged in any activity that permitted an oil spill to emanate from the UST. The trial court ruled that as the tenant of the adjacent building, GACO did not have the capacity to take action to prevent the oil spill or to clean up the resulting contamination

The appellate division affirmed, agreeing that GACO did not an ownership interest in the UST and did not assume any responsibility for its maintenance and repair.

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