JBG/Twinbrook Metro Ltd. Partnership v. Wheeler

• Decision Date: 01 September 1996
• Docket Number: No. 80,80
• Citation: 346 Md. 601,697 A.2d 898
• Parties: JBG/TWINBROOK METRO LIMITED PARTNERSHIP v. Bobby Joe WHEELER et al. ,
• Court: Maryland Court of Appeals

Page 601

346 Md. 601

697 A.2d 898

JBG/TWINBROOK METRO LIMITED PARTNERSHIP v. Bobby Joe WHEELER et al.

No. 80, Sept. Term, 1996.

Court of Appeals of Maryland.

Aug. 6, 1997.

Reconsideration Denied Sept. 15, 1997.

Brian Koukoutchos, Bedford, MA (Roger W. Titus, Richard H. Mays, Thomas M. Lingan, Venable, Baetjer and Howard, L.L.P., on brief), Rockville, for appellant.

William J. Stack (Exxon Co., Debra S. Rosen, Archer & Greiner, Haddonfield, NJ, Michael Skojec, Matthew W. Oakey, Gallagher, Evelius & Jones, Baltimore, on brief), E. Charles Dann, Jr. (Goodell, DeVries, Leech & Gray, L.L.P., on brief), Baltimore, Alan D. Rothenberg, Rockville, on brief, for appellees.

Argued before BELL, C.J., and ELDRIDGE, RODOWSKY, CHASANOW, KARWACKI, RAKER and WILNER, JJ.

RODOWSKY, Judge.

The plaintiff in this case appeals from a judgment on a jury verdict in favor of the defendants in an action for damages based on the subsurface percolation of gasoline into plaintiff's land from a gasoline service station on adjacent land. The issues concern the construction of Maryland Code (1982, 1996 Repl.Vol.), § 4-409(a) of the Environment Article (Env.), the applicability of assumption of the risk to what the parties have treated as a claim of trespass quare clausum fregit, and the sufficiency of the plaintiff's evidence to establish liability for trespass on the part of two oil companies which at different times sold gasoline to the service station owner and operator.

Bobby Joe Wheeler (Wheeler), one of the defendants below, owns and operates the service station. For five or more years prior to 1982 the station dispensed Gulf brand gasoline, the product of Gulf Oil Corporation, a predecessor of the defendant Chevron U.S.A. Inc. (Chevron). ¹ Since 1990 Wheeler has sold Exxon brand gasoline, the product of the defendant, Exxon Company, U.S.A. (Exxon).

The station is located in Montgomery County at 1901 Rockville Pike, on the southeast corner of Rockville Pike and Thompson Avenue. ² The station fronts approximately 150 feet on Rockville Pike and extends to the east approximately 165 feet along the south side of Thompson Avenue. The underground storage tanks (USTs) are in the southwest quarter of the service station property, the nearest approximately eighty-eight feet from the eastern border of the station.

The eastern boundary of the station abuts the western boundary of a parcel extending along the south side of Thompson Avenue to Chapman Avenue and known as 1901 Chapman Avenue. This property is owned by the plaintiff, JBG/Twinbrook Metro Limited Partnership (JBG), and it is improved by a three-story masonry office building with basement built in 1960. The office building sits on the southerly half of the property at 1901 Chapman Avenue, with the building's west wall approximately 100 feet from the boundary with the gasoline station. An embankment along the property line slopes down from the gas station elevation to an asphalt paved parking lot (the West Lot) that lies between the foot of the embankment and a walkway in front of the entrance located on the west side of the office building. Another asphalt paved parking lot on 1901 Chapman Avenue lies between the north side of the office building and Thompson Avenue (the North Lot). A single entrance/exit serves both lots on Thompson Avenue.

Gasoline floats on water, and subsurface, free phase gasoline can float on underground water and be carried in the direction of the water flow. The generalized ground water flow for the two properties is from southwest to northeast, that is, from the USTs in the southwest corner of the gas station to its northeast corner which abuts the northwest corner of 1901 Chapman Avenue.

Chevron originally developed the Rockville Pike property as a service station, leased it to Wheeler in 1976, and sold it to Wheeler in September 1978. Included in the sale were the then existing USTs. Sometime in 1978 or 1979 the station manager discovered a hole in one of the USTs, and the hole was subsequently patched. Chevron continued to supply Wheeler with gasoline through 1981.

From 1982 until 1990 Wheeler operated the service station independently of any affiliation with an oil company, purchasing gasoline from independent distributors. In September 1990 Wheeler entered into an agreement with Exxon under which Wheeler agreed to sell Exxon products exclusively for ten years in consideration of Exxon's paying $488,300 for remodeling the station and installing new USTs and dispensers.

Two months later, when the old USTs were unearthed and removed, under the supervision of the Maryland State Department of Environment (MDE), two of the old tanks were found to contain holes. ³ MDE ordered Wheeler to remove approximately 1,600 tons of contaminated soil from his property and to install monitoring wells (MWs) to determine whether any gasoline had migrated from the tank site. In January 1991 readings from these wells indicated that gasoline had migrated throughout the service station property. At the direction of MDE, Wheeler installed additional wells on his property and, with the permission of the then adjoining property owner, Equitable Life Assurance Society (Equitable), placed wells on 1901 Chapman Avenue. Wheeler also began removing free phase gasoline from the subsurface of the service station property.

After undertaking a preliminary investigation, JBG, on February 8, 1991, entered into a contract with Equitable to purchase for $28.5 million a portfolio of investment properties in the Twinbrook Metro area of Montgomery County that included 1901 Chapman Avenue. Under the contract JBG had sixty days to complete a due diligence analysis.

JBG hired Hygienetics Inc. (Hygienetics) to perform an environmental analysis of all of the properties. An initial report of March 27, 1991, identified 1901 Chapman Avenue as having the potential for an on-site contamination from off-site sources. On April 5, 1991, Hygienetics then reported "the discovery of free phase gasoline at the 1901 Chapman Avenue site." This second report states that "[a]t least 6.5 feet of gasoline has been confirmed to exist in monitoring well MW-5" and that the contamination is "believed [to be] a direct result of a release [of gasoline] from a UST at the adjacent Rockville Service Center Exxon." ⁴

A third report prepared by Hygienetics and submitted to Equitable on April 10, 1991, identified "[t]he existence of approximately two feet of free product at MWW-7." ⁵ This report indicated that "the current recovery operation is inadequate ..." and observed that "[t]he existence of free product in MWW-7 suggests that the plume [of free phase gasoline] may be approaching the building foundation."

Within the first two weeks of MDE's having ordered remediation, approximately 500 gallons of free phase, subsurface gasoline were recovered by use of a product skimmer from a well on the station site. Wheeler's employees hand-bailed a few hundred additional gallons.

Wheeler also installed a remediation system that recovered free phase gasoline and contaminated ground water from a well located at the Thompson Avenue entrance of 1901 Chapman Avenue. From there the liquids were pumped to a facility erected in the northeast corner of Wheeler's property where the gasoline was separated and the water treated. By April 1991 approximately seventy-five gallons of gasoline had been recovered through this system.

JBG expressed its concern to Equitable over the inclusion of 1901 Chapman Avenue in the properties to be purchased. Equitable then obtained from MDE an estimate of $150,000 as the total cost of the corrective work, apparently on both the Exxon station and the office building sites. MDE had ordered Wheeler to pay for the corrective work. By letter of April 10, 1991, to JBG, Equitable proposed the following indemnification: "In the unlikely event that the service station fails to pay for the corrective action, and the State goes after JBG for this cost, Equitable will pay for the direct cost of state required correction/clean-up not to exceed $150,000." JBG accepted the indemnity approach to their concern, agreed upon a more specifically drafted indemnification, and took title to 1901 Chapman Avenue by a deed dated April 16, 1991. The representative of JBG's management testified that management believed at the time of closing that the contamination was confined to the northwest corner of the West Lot, away from the office building, and that the contamination would be removed.

After JBG took title the monitoring wells on its property were relatively free of contamination. In the spring of 1992, however, the amount of free phase gasoline on the station site was found to be increasing, elevating the risk that the plume would enlarge on the plaintiff's property. In order to determine if this were so, MW-12 was sunk on the West Lot, approximately thirty feet from the northwest corner of the office building, and MW-13 was sunk near the west end of the North Lot. On July 8, 1992, there was approximately one-half inch of free gasoline in MW-12, and on July 28, 1992, there were five inches of free floating product in that well. Also on July 8, over three feet of free product was found in MW-15 located in the northwest portion of the West Lot.

Eventually twelve monitoring wells were dug in the Chapman site, nine in the service station site, and two others on the opposite side of Thompson Avenue from the two properties. There was evidence that by the first quarter of 1993 the plume of underground gasoline, extending in a southwesterly-northeasterly direction from the UST area of the station lot, had spread throughout most of the service station, approximately one-half of the West Lot on 1901 Chapman Avenue, and the northwest corner of the North Lot. Because of the odor of gasoline on the West Lot, JBG installed a vapor alarm and ventilation system in the basement of its building and imposed a no smoking ban on...