Ross v. Lowitz
| Citation | 120 A.3d 178,222 N.J. 494 |
| Decision Date | 06 August 2015 |
| Docket Number | A-6 September Term 2014, 074142 |
| Parties | John ROSS and Pamela Ross, Plaintiffs–Appellants, v. Karen A. LOWITZ f/k/a Karen A. Santora; Calvin Haley, Susan Ellman, New Jersey Manufacturers Insurance Company, High Point Preferred Insurance Company, Defendants–Respondents. State Farm Fire & Casualty Company, a/s/o Karen Santora and New Jersey Manufacturers Insurance Company a/s/o Karen Santora, Plaintiffs–Respondents, v. Susan Ellman, Defendant–Respondent. |
| Court | United States State Supreme Court (New Jersey) |
Christopher J. Hanlon argued the cause for appellants (Hanlon Niemann & Wright, attorneys).
Kevin T. Bright argued the cause for respondent Susan Ellman (Marshall, Dennehey, Warner, Coleman & Goggin, Cherry Hill, attorneys).
Peter E. Mueller argued the cause for respondent Karen A. Lowitz (Harwood Lloyd, Hackensack, attorneys).
Jacob S. Grouser argued the cause for respondent New Jersey Manufacturers Insurance Company (Hoagland, Longo, Moran, Dunst & Doukas, New Brunswick, attorneys).
John M. Bowens argued the cause for respondent State Farm Fire and Casualty Company (Schenck, Price, Smith & King, attorneys; Mr. Bowens and Sandra Calvert Nathans, Florham Park, on the brief).
This appeal arises from an action brought by plaintiffs John and Pamela Ross, who allege that their residence was damaged by the migration of home heating oil from a leaking underground oil storage tank located at a neighboring residence. Plaintiffs asserted claims against the current and former owners of the property where the underground storage tank was located, based upon common law theories of negligence, strict liability, private nuisance and trespass, as well as violations of the Spill Compensation and Control Act, N.J.S.A. 58:10–23.11 to –23.24 (Spill Act). Plaintiffs also sued the insurers who provided homeowners' coverage to the former owners of the neighboring property, asserting a claim for breach of the implied covenant of good faith and fair dealing, in addition to claims for nuisance and trespass.
After plaintiffs instituted their action and following their filing of an order to show cause, two of the defendant insurers conducted a remediation of the contamination on plaintiffs' property. The trial court granted summary judgment dismissing plaintiffs' claims against the defendant property owners and their insurers. The Appellate Division affirmed that determination.
We consider two issues raised by plaintiffs in this appeal. First, we review the Appellate Division's judgment affirming the trial court's grant of summary judgment dismissing plaintiffs' private nuisance and trespass claims against the residential property owner defendants, whose insurers remediated plaintiffs' property. We concur with the Appellate Division that no claim for private nuisance or trespass may be premised on this record, which is devoid of proof of negligence, recklessness, intentional conduct, or the conduct of an abnormally dangerous activity by defendant residential property owners. We decline to expand the private nuisance and trespass causes of action recognized by New Jersey law to impose strict liability in the setting of this case.
We also agree with the Appellate Division that plaintiffs may not assert a bad-faith claim against defendant insurers that provided homeowners' coverage to defendant Karen Lowitz (Lowitz). Absent an assignment of rights from Lowitz to plaintiffs, or evidence that Lowitz and her insurers agreed to confer on plaintiffs the status of third-party beneficiaries to their insurance contract, plaintiffs have no direct claim against Lowitz's insurers based on an alleged breach of the implied covenant of good faith and fair dealing.
Accordingly, we hold that the trial court properly dismissed plaintiffs' claims and affirm the judgment of the Appellate Division.
On a date that is not revealed by the record, an underground tank intended for the storage of home heating oil was installed on the property designated as 72 Leighton Avenue in Red Bank. From 1988 to 1999, that property was owned by defendant Susan Ellman (Ellman). Ellman's homeowner's insurance coverage was underwritten by defendant High Point Preferred Insurance Company (High Point).
In 1999, Ellman sold 72 Leighton Avenue to Lowitz. Prior to closing, Lowitz arranged for the oil storage tank on the property to be tested by an environmental consultant. The consultant found no leakage in the storage tank.
Lowitz owned 72 Leighton Avenue from 1999 to October 2003. Until February 2003, Lowitz's homeowner's insurance coverage was issued by defendant State Farm Fire and Casualty Company (State Farm). Beginning on March 1, 2003, Lowitz obtained her homeowner's insurance coverage from defendant New Jersey Manufacturers Insurance Company (NJM).
In August 2003, Lowitz entered into a contract to sell 72 Leighton Avenue to defendant Calvin Haley (Haley). Prior to closing, Lowitz arranged for an environmental consultant to inspect the underground storage tank. The consultant located a leak. Lowitz notified State Farm and NJM, and the insurers arranged and paid for the remediation of the leaked oil on Lowitz's property.
In 2004, plaintiff John Ross bought the residential property designated as 66 Leighton Avenue. Plaintiffs contend that John Ross was unaware that the oil tank on Lowitz's property had leaked when he bought the property. According to plaintiffs, John Ross first learned in 2006 that the oil had contaminated Lowitz's property and an adjoining property, 70 Leighton Avenue, but he did not learn at that time that oil had migrated to his own property.
In late 2006, plaintiff John Ross put his property up for sale and, in May 2007, signed a contract with a prospective buyer to sell the property for a purchase price of $325,000. A week after the contract was signed, an environmental consultant retained by State Farm and NJM informed plaintiff that the oil had migrated to his property. The prospective purchaser of the property cancelled the contract, and John Ross continued to own the property.1
After an environmental consultant retained by High Point took samples from their property, plaintiffs retained counsel. In August 2007, plaintiffs' counsel sought a commitment from State Farm and NJM that the insurers would promptly arrange for remediation of the oil on John Ross's property and for the payment of plaintiffs' expenses incidental to that remediation. In October 2007, State Farm and NJM agreed to pay $20,000 toward the replacement of plaintiffs' deck, pool and retaining wall, in the event that remediation on the property necessitated the destruction of those structures. According to plaintiffs, State Farm and NJM were not responsive to plaintiffs' counsel's repeated request that they commence remediation and pay plaintiffs' expenses. Plaintiffs further assert that State Farm and NJM delayed the remediation until after plaintiffs filed their lawsuit and order to show cause.
In September 2008, plaintiffs commenced this action in the Law Division. In an amended complaint filed shortly thereafter in October 2008, plaintiffs named as defendants, Lowitz, Ellman, State Farm and NJM.2 Against all defendants, they pled claims based on negligence, strict liability, nuisance, trespass and Spill Act liability. Plaintiffs' nuisance and trespass claims were premised on the continued presence of hazardous substances leaked from the homeowner defendants' underground storage tank. They did not allege in their original or amended complaint a nuisance or trespass claim for damages resulting from the delay that occurred before the property was remediated.
Plaintiffs also asserted claims against the insurers. Plaintiffs claimed that they were third-party beneficiaries of the insurance contracts between the insurers and their insureds, and alleged that the insurers violated the covenant of good faith and fair dealing. Plaintiffs sought remediation, damages for the alleged loss of the use of their home, and damages for the alleged diminution in the value of their property.
In July 2009, plaintiffs filed an order to show cause before the trial court. Shortly thereafter, plaintiffs, State Farm and NJM entered into an agreement, memorialized in a consent order entered by the trial court, regarding the terms of the remediation of plaintiffs' property.3 Thereafter, environmental consultants retained by State Farm and NJM excavated portions of plaintiffs' property to remove the contamination. That process took approximately seven weeks and was completed in late October 2009. In August 2010, the New Jersey Department of Environmental Protection (DEP) issued a “No Further Action Letter,” pursuant to N.J.S.A. 58:10B–13.1.
State Farm, NJM, Ellman, and Lowitz moved for summary judgment. The trial court granted all defendants' summary judgment motions. With respect to State Farm and NJM, the trial court held that because plaintiffs were not parties to the insurance contracts at issue, they had no standing to recover the policy proceeds, and that public policy did not mandate that a third party be deemed the intended beneficiary of the insurance company's contractual duty to its insured to act in good faith with respect to a settlement. Accordingly, the trial court dismissed plaintiffs' claims against State Farm and NJM.
With respect to Ellman and Lowitz, the trial court reasoned that there was no evidence that either homeowner acted negligently with respect to the maintenance of the oil tank on the property that each defendant successively owned. The court also concluded that the maintenance of the oil tank did not constitute an abnormally dangerous activity. It found that neither plaintiffs' private nuisance claims, nor their trespass claims, could be maintained in the setting of this case.4
Plaintiffs appealed the trial court's grant of summary judgment. In an unpublished opinion, the Appellate Division affirmed the trial...
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