Rosenblatt v. Exxon Co., U.S.A.

• Decision Date: 01 September 1993
• Docket Number: No. 137,137
• Citation: 642 A.2d 180,335 Md. 58
• Parties: , 38 ERC 1908 Thomas ROSENBLATT v. EXXON COMPANY, U.S.A. et al. ,
• Court: Maryland Court of Appeals

Page 58

335 Md. 58

642 A.2d 180, 38 ERC 1908

Thomas ROSENBLATT v. EXXON COMPANY, U.S.A. et al.

No. 137, Sept. Term, 1993.

Court of Appeals of Maryland.

June 6, 1994.

G. Macy Nelson (Jacqueline S. Russell, Anderson, Coe & King, all on brief), Baltimore, for appellant.

John E. Griffith, Jr. (Ann Burke Lloyd, Piper & Marbury, both on brief), Baltimore, Daniel P. Rigterink (Bregman, Berbert & Schwartz, all on brief), Bethesda, for appellees.

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

MURPHY, Chief Judge.

This case involves the question whether, under Maryland law, a subsequent occupier of commercial property has a cause of action in strict liability, negligence, trespass, or nuisance for economic losses sustained, against a former occupant whose activities during its occupancy allegedly caused the property to become contaminated by toxic chemicals.

I

In July 1986, Thomas Rosenblatt leased a parcel of real property located in Prince George's County, Maryland, from its owner, Earl Wenger. The lease agreement contained the language that Rosenblatt was accepting the property "as is." Rosenblatt planned to open and operate a "Grease-N-Go" automotive quick lubrication business on the property. Rosenblatt's rental payments were contingent upon his obtaining a special exception to permit the operation of the business and a building permit for construction.

The previous tenant, Exxon Company, U.S.A., had leased the property from 1951 to 1985, and had subleased the property during that period to various independent dealers for use as a gasoline station. ¹ In 1951, Exxon ² had installed gasoline storage tanks on the property; the tanks remained on the property until 1985, when Exxon's lease was terminated.

In preparing for the construction of his "Grease-N-Go" facility, Rosenblatt hired ATEC Environmental Consultants (ATEC) to perform a geotechnical study of the property to identify potential construction problems. In ATEC's initial report, dated January 30, 1987, it noted the presence of a "very strong" hydrocarbon odor in soil and groundwater samples, and it recommended that a separate environmental study be performed to determine whether hydrocarbon contamination was present.

In May 1988, the special exception was granted, and in October 1988, Rosenblatt began paying rent on the property. In January 1989, Rosenblatt notified Exxon of the possible contamination. Exxon responded to Rosenblatt by letter dated February 9, 1989, stating that the ATEC report was a geotechnical report rather than an environmental report, that there was "no factual basis" to believe that there was contamination, and that it "had no further responsibility at this time."

Rosenblatt thereafter requested that ATEC complete an environmental assessment of the property. In March 1989, ATEC conducted a study and found extensive petroleum contamination of the soil and groundwater on the property, specifically benzene, a known carcinogen, and other toxic substances.

As a result of this discovery, the Maryland Department of the Environment was notified, conducted an investigation, and issued a Notice of Violation, advising that the contamination constituted a violation of Maryland law, and requiring Exxon to perform a hydrogeological study of the property. Exxon commenced its study in May 1989, and thereafter undertook a remediation of the property. The State's Hazardous and Solid Waste Management Administration informed Rosenblatt and Wenger that construction efforts could continue but would have to be coordinated with Exxon's remediation efforts.

In January 1990, Rosenblatt filed suit against Exxon in the Circuit Court for Prince George's County, seeking economic damages, including expenses incurred as a result of the contamination and lost future profits from his planned business. ³ His complaint included counts of negligence, strict liability, trespass, nuisance, and other counts not here at issue.

Shortly thereafter, in March 1990, Rosenblatt was informed by the bank to which he had applied for financing that it would not finance the "Grease-N-Go" project, in part because of the environmental condition of the property. Without this financing, Rosenblatt was unable to start his business.

In April 1990, the case was removed to the United States District Court for the District of Maryland, where Exxon filed a motion for summary judgment on all counts. Rosenblatt filed a motion to amend his complaint to include as defendants the independent service station operators. The court (Hargrove, J.) granted Exxon partial summary judgment on the counts not here at issue, and granted Rosenblatt's motion to amend.

On August 14, 1991, the federal court remanded the remaining counts of negligence, strict liability, trespass, and nuisance against Exxon and the independent operators to the circuit court. Exxon and two of the operators, Flaherty and Savard, filed motions for summary judgment in the circuit court on the remaining counts. On July 13, 1993, the court (Woods, J.) granted the motions, stating that Maryland law does not provide tenants of commercial property with a cause of action based upon negligence, strict liability, trespass or nuisance against previous tenants of the property. The court stated that these tort claims were available only to occupants of neighboring land or others to whom a duty was owed by the defendant. Thereafter, the court entered an order granting summary judgment to the remaining two defendants, Kwak and Lee, who were pro se, and final judgment in favor of all defendants.

Rosenblatt appealed to the Court of Special Appeals. We granted certiorari prior to review by the intermediate appellate court to consider the issues presented in this appeal.

II

Rosenblatt argues that an occupier of land should have a cause of action in strict liability against a prior occupier whose abnormally dangerous activity contaminated the land. He acknowledges that this principle has heretofore been applied in Maryland to actions by occupants of neighboring land, rather than subsequent occupiers of the same land. He argues, however, that the policies underlying the strict liability principles support their extension to the instant case. He observes that courts in two other jurisdictions have held that subsequent occupiers may sue under a theory of strict liability and urges that Maryland join those jurisdictions.

Rosenblatt contends that the transport, storage and dispensing of gasoline constitute abnormally dangerous activities. He urges that Exxon, as an enterprise engaging in such activities, should bear the risk of harm resulting therefrom. Exxon's liability, he asserts, should not be limited to adjacent property owners. He suggests that although Exxon and Rosenblatt were not neighbors geographically, they were "neighbors in time." He urges that it "makes no sense" to allow a geographic neighbor of the affected property to maintain a strict liability cause of action, but not to allow one who subsequently comes into possession of the contaminated property to do so. He suggests that a restriction on the doctrine of strict liability to claims involving neighboring landholders would serve to exonerate tenants who have contaminated a property and then moved on.

He argues further that a cause of action in negligence should also be available to the subsequent occupier of contaminated land. He says that a subsequent occupier of contaminated land is owed a tort duty by a prior occupier because it is foreseeable that contamination from the activities of a prior occupant will harm subsequent occupants. Because Exxon was a lessee, he contends that it was foreseeable to the company that a subsequent lessee would be harmed by Exxon's failure to exercise care in the conduct of its business. Moreover, he suggests that Exxon, because it is in the business of producing, handling, storing and marketing petroleum products, should be held to a high degree of care in conducting its business. He maintains that Exxon was aware of the risk of petroleum products leaking from underground storage tanks and was also aware that measures could be taken to reduce the risk of leakage. Thus, he concludes, it owed a duty to Rosenblatt to prevent such harm.

Rosenblatt asserts that a subsequent possessor of land may also bring a claim of trespass against a prior occupant of the same land. He maintains that when a prior occupant creates a condition on land that interferes with the subsequent occupant's interest and exclusive possession of the land, there is a trespass. He contends that there is no requirement that the property be in the possession of another at the time of creation of the condition. He claims that when property changes hands, but the presence of contamination placed there by the former occupant continues so that it invades a new possessor's interest, a continuing trespass has occurred. He asserts that by causing hydrocarbon contamination of the property, Exxon has interfered with Rosenblatt's interest in the exclusive possession of his land and thus is liable for a continuing trespass.

Moreover, Rosenblatt contends that a subsequent occupant of contaminated land has a cause of action in nuisance against a prior occupant whose contamination of the property interferes with the subsequent occupant's interest in the private use and enjoyment of the property. He argues that the nuisance doctrine is not limited to interference with an adjacent landowner's use of land, but should be extended to an occupant of land previously occupied by the one who created the damage.

Exxon and the independent operators (collectively Exxon) aver that causes of action traditionally available only to geographical neighbors should not be extended to subsequent occupants of property. Exxon argues that, unlike a contemporary occupier of land, a subsequent occupant can avoid harm simply by investigating prior to occupying...