Arlington Forest Associates v. Exxon Corp.

• Decision Date: 19 September 1991
• Docket Number: Civ. No. 91-0369-A.
• Citation: 774 F. Supp. 387
• Parties: ARLINGTON FOREST ASSOCIATES, Plaintiff, v. EXXON CORPORATION, Defendant/Third-Party Plaintiff, v. William T. BRYDEN, Third-Party Defendant.
• Court: U.S. District Court — Eastern District of Virginia

774 F. Supp. 387

ARLINGTON FOREST ASSOCIATES, Plaintiff, v. EXXON CORPORATION, Defendant/Third-Party Plaintiff, v. William T. BRYDEN, Third-Party Defendant.

Civ. No. 91-0369-A.

United States District Court, E.D. Virginia, Alexandria Division.

September 19, 1991.

Thomas Earl Patton, Schnader, Harrison, Segal and Lewis, Washington, D.C., for Arlington Forest Associates.

Mary Elizabeth Brobson, Piper & Marbury, Washington, D.C., for Exxon Corp.

MEMORANDUM OPINION

ELLIS, District Judge.

This case presents the question, unresolved in Virginia, whether the storage and removal of gasoline in underground tanks is an "abnormally dangerous" activity for which strict liability should be imposed.

The matter is before the Court on defendant Exxon Corporation's ("Exxon") motion for partial summary judgment with respect to counts II (strict liability) and V (contractual indemnity) of the complaint. Exxon contends (1) that the storage and removal of gasoline in underground tanks are not abnormally dangerous activities and (2) that plaintiff Arlington Forest Associate's ("AFA") cannot recover under the indemnity provision of the lease for claims not instituted by a third party. For the reasons set forth here, the Court concludes that the Supreme Court of Virginia, if presented with the first question, would hold that storage and removal of gasoline in underground tanks is not an abnormally dangerous activity for which common law strict liability should be imposed.¹ The Court also finds that AFA falls outside the contract indemnity provision and hence is not entitled to its benefits. Exxon's motion for partial summary judgment must therefore be granted.

Background

From 1947 to 1987, Exxon and its predecessor corporations leased a gasoline station located at 4831 N. First Street in Arlington, Virginia. Exxon and its predecessor corporations, in turn, subleased the station to independent operators, who operated the station and its equipment continuously during the lease period. Included in the station equipment were five underground gasoline storage tanks, four 2,000 gallon tanks dating from 1947, and one 4,000 gallon tank installed in 1957.²

In November of 1982, Exxon renewed a sublease with independent operator and co-defendant William Bryden. The lease stipulated that Bryden allow Exxon to replace all the storage tanks. The tanks had not been removed when AFA purchased the property in 1983. Not until 1988, after the lease had expired, were the storage tanks finally removed.

In 1989, AFA discovered elevated concentrations of organic vapors in the property's subsurface soil. These findings reflect gasoline contamination of the soil. AFA contends that Exxon had been aware of gasoline leakage in the tanks since 1979, but had failed to remove them in time to prevent contamination of the property. AFA further maintains that the combination of tank age and soil conditions indicates a high likelihood that the tanks sustained serious corrosion damage leading to gasoline leakage. This leakage, according to AFA, is of special concern given the proximity of the service station property to a residential community. AFA alleges the property is approximately sixty feet from the nearest residential basement and one thousand feet from Lubber Run Creek, the nearest body of surface water. Based on these facts, AFA contends that Exxon is strictly liable under Virginia common law for damages attributable to the gasoline leakage.

Analysis

Count II (Strict Liability)

The Supreme Court of Virginia has not squarely addressed whether the leakage of gasoline from underground storage tanks warrants the imposition of common law strict liability. In these circumstances, this Court's task is to divine what Virginia's highest court would conclude if faced with this question. See Erie R.R. v. Tompkins, 304 U.S. 64, 58 S.Ct. 817, 82 L.Ed. 1188 (1938); see also Commissioner v. Estate of Bosch, 387 U.S. 456, 465, 87 S.Ct. 1776, 1782-83, 18 L.Ed.2d 886 (1967); Bernhardt v. Polygraphic Co. of America, 350 U.S. 198, 209, 76 S.Ct. 273, 279, 100 L.Ed. 199 (1956) (Frankfurter, J. concurring). This divination involves a two-step process. First, Virginia law must be examined to ascertain what rule or rules the Supreme Court of Virginia would likely use in analyzing and deciding the liability of a landowner or user for the storage and removal of gasoline in underground tanks on the property. The second step is the application of such rule or rules to the facts at bar.

The Court concludes that Virginia, consistent with other jurisdictions, would apply the Restatement (Second) of Torts §§ 519 and 520 as the liability standard in this context. Although unsettled in earlier Virginia cases, it is now established that Virginia recognizes the applicability of the doctrine of strict liability in certain circumstances. Equally well established is that the applicability of the doctrine in Virginia is governed by §§ 519 and 520 of the Restatement. See M.W. Worley Construction Co. v. Hungerford Inc., 215 Va. 377, 210 S.E.2d 161, 164 (1974) (adopting "the rule of absolute or strict liability for direct damage to neighboring property" in blasting cases and citing §§ 519 and 520). In reaching this conclusion, Virginia is in line with the growing majority of jurisdictions today.³

Strict liability attaches only to abnormally dangerous activities. This principle is embodied in § 519, which states in pertinent part that:

one who carries on an abnormally dangerous activity is subject to liability for harm to the person, land or chattels of another resulting from the activity, although he has exercised the utmost care to prevent the harm. Restatement (Second) of Torts § 519(1).

The doctrine of strict liability derives from the notion that for certain abnormally dangerous activities the "one who conducts it should prepare in advance to bear the financial burden of harm proximately caused to others by such activity." C. Morris & C.R. Morris on Torts, Ch. IX at 231 (2d ed. 1980). See also Sterling v. Velsicol Chemical Corp., 647 F.Supp. 303 (W.D.Tenn. 1986), rev'd on other grounds, 855 F.2d 1188 (6th Cir.1988) (compensatory damages awarded when chemical corporation was found strictly liable for contamination of residential water supply attributed to chemical leakage). "The liability arises out of the abnormal danger of the activity itself, and the risk that it creates, of harm to those in the vicinity." Restatement (Second) of Torts § 519 comment d. Thus, the abnormally dangerous activity "will be tolerated by the law, but the company must pay its way by insuring the public against the injury it causes." Peneschi v. National Steel Corp., 170 W.Va. 511, 295 S.E.2d 1, 6 (1982).

§ 520 lists six factors to be assessed in determining whether an activity is abnormally dangerous:

(a) existence of a high degree of risk of some harm to the person, land or chattels of others;

(b) likelihood that the harm that results from it will be great;

(c) inability to eliminate the risk by exercise of reasonable care;

(d) extent to which the activity is not a matter of common usage;

(e) inappropriateness of the activity to the place where it is carried on; and

(f) extent to which its value to the community is outweighed by its dangerous attributes. Restatement (Second) of Torts § 520.

These factors are interrelated. Thus, a court should consider these factors as a whole, apportioning weight to each in accordance with the facts in evidence. See Restatement (Second) of Torts § 520 comment 1. And significantly, "any one of them is not necessarily sufficient of itself in a particular case, and ordinarily several of them will be required for strict liability." Id. comment f.

Central to the determination of whether an activity is abnormally dangerous is whether it could be made safe through the exercise of reasonable care. See Philip Morris, Incorporated v. Emerson, 235 Va. 380, 368 S.E.2d 268 (1988) (holding that strict liability would not apply to the disposal of the highly toxic chemical pentaborane, chiefly because such disposal could have been conducted safely if reasonable precautions had been taken); see also Hudson v. Peavey Oil Company, 279 Or. 3, 566 P.2d 175 (1977) (no strict liability where evidence did not show that the risk of seepage from underground gasoline tanks could not be eliminated by reasonable care). This test, expressed in § 520(c), does not contemplate that all risk be capable of elimination by due care. Absolute safety is not required. Rather, the risk must be reducible by due care to a point where the likelihood of harm is no longer high.⁴ See New Meadows Holding Co. by Raugust v. Washington Water Power Company, 102 Wash.2d 495, 687 P.2d 212 (1984) (noting, in denying strict liability for leakage from natural gas lines, that § 520(c) is concerned with the capacity to eliminate high degrees of risk and that some degree of risk will always be present). If an activity can be performed safely with ordinary care, negligence serves both as an adequate remedy for injury and a sufficient deterrent to carelessness. Strict liability is reserved for selected uncommon and extraordinarily dangerous activities for which negligence is an inadequate deterrent or remedy.

Maintained, monitored, and used with due care, underground gasoline storage tanks present virtually no risk of injury from seepage of their contents. They are not abnormally dangerous. Sound tanks, timely replacement of impaired tanks, modern corrosion control techniques, and adequate testing for leakage can eliminate all but a tolerably small amount risk.⁵ The injury alleged in this case apparently occurred because the tanks fell into a preventable state of disrepair. Only those activities that remain dangerous despite the exercise of all reasonable precautions warrant imposition of strict liability. Here, reasonable precautions would have sufficed to prevent the harm.

That strict liability is inapplicable in this...