Rudder v. Hosack

Decision Date09 February 2022
Docket NumberA171925
Citation317 Or.App. 473,506 P.3d 1156
Parties Richard E. RUDDER and Wendy L. Rudder, Plaintiffs-Respondents, v. William D. HOSACK and Kathleen A. Hosack, Defendants-Appellants.
CourtOregon Court of Appeals

Katie Jo Johnson, Portland, argued the cause for appellants. Also on the briefs were J. Kurt Kraemer and McEwen Gisvold LLP.

Carson Bowler, Portland, argued the cause for respondents. Also on the brief were Jessica A. Schuh, Alex Bish, and Schwabe, Williamson & Wyatt, P.C.

Before James, Presiding Judge, and Lagesen, Chief Judge, and Kamins, Judge.

JAMES, P. J.

This case concerns liability for a leaking oil tank on residential property. Plaintiffs, who bought the property from defendants, sued to obtain a judicial declaration holding defendants strictly liable for remedial action costs under ORS 465.255. That statute provides, in relevant part:

"(1) The following persons shall be strictly liable for those remedial action costs incurred by the state or any other person that are attributable to or associated with a facility and for damages for injury to or destruction of any natural resources caused by a release:
"(a) Any owner or operator at or during the time of the acts or omissions that resulted in the release.
"(b) Any owner or operator who became the owner or operator after the time of the acts or omissions that resulted in the release, and who knew or reasonably should have known of the release when the person first became the owner or operator."

We conclude that the trial court did not err in declaring defendants liable under ORS 465.255(1)(a) and allocating 100 percent liability for remedial action costs attributable to, or associated with, the underground heating oil tank to defendants. Accordingly, we affirm.

I. BACKGROUND

Defendants owned a residential property located in Coos Bay, Oregon, from 1975 to 2013. During that time period, defendants used an underground heating oil tank until 2006 when they converted to natural gas. After defendants stopped using the tank, they drained the majority of the heating oil out of the tank using a professional fuel pump.

In 2013, plaintiffs purchased the property from defendants. Before closing, defendants told plaintiffs that there was a heating oil tank on the property. Plaintiffs waived their right to inspect the tank. The parties documented the sale of the property with a Real Estate Sales Agreement. As relevant to this appeal, the agreement contains an "as-is" clause, which provides:

"Except for Seller's express written agreements and written representations contained herein, and Seller's Property Disclosure, if any, Buyer is purchasing the Property ‘AS-IS,’ in its present condition and with all defects apparent or not apparent. This provision shall not be construed to limit Buyer's right to implied new home warranties, if any, that may otherwise exist under Oregon law."

The agreement also includes an Addendum E, which provides:

"Buyer releases all contingencies in regards to this sale, including the inspections in general and specifically the presence of an underground oil tank."

Following the sale, plaintiffs lived at the property for about three years. In 2016, a release of heating oil was discovered. The initial investigation conducted by plaintiffs revealed significant heating oil contamination in the soil and groundwater. The Oregon Department of Environmental Quality (DEQ) sent both plaintiffs and defendants letters informing them of their potential duties to clean up the oil release.

Plaintiffs and defendants could not agree on their respective responsibilities for the cleanup cost. Plaintiffs then filed suit, seeking declaratory relief to hold defendants strictly liable for remedial action costs respecting the contamination under ORS 465.255(1)(a) on the ground that defendants were the owners of the property at the time of the release. Defendants denied liability, contending that plaintiffs were the parties who were liable under the statute and responsible for all remedial action costs. Defendants raised two counterclaims, seeking contribution for remedial action costs from plaintiffs under ORS 465.257, and alleging that plaintiffs breached the sales agreement by bringing the lawsuit because the as-is clause and Addendum E of the agreement constituted a promise by plaintiffs to not hold defendants responsible for any environmental liabilities caused by the oil tank.

Plaintiffs waived their right to a jury, but defendants requested a jury to make factual findings necessary to support the court's liability determinations under ORS 465.255. Following a two-day jury trial, the court first granted plaintiffsmotion for a directed verdict on defendants’ breach of contract counterclaim. After being instructed by the court on the remaining claims, the jury deliberated and returned a verdict. On plaintiffs’ claim for declaratory relief, the jury found: (1) heating oil was released from the underground storage tank on the property during the period defendants owned the property (1975 to 2013); and (2) no release of oil occurred during the time that plaintiffs owned the property (2013 to 2016). Thereafter, the court concluded, as a matter of law, that neither the as-is clause nor Addendum E in the parties’ real estate sales agreement is an agreement to insure, hold harmless, or indemnify defendants for environmental strict liability under ORS 465.255.

Based on the jury's factual findings and the court's conclusions of law, the court entered a declaratory judgment declaring defendants were strictly liable under ORS 465.255 for remedial action costs attributable to or associated with the underground oil tank. On defendants’ counterclaim for contribution, declaratory judgment was entered in favor of plaintiffs that, as between plaintiffs and defendants, defendants were the only parties responsible for remedial action costs. Subsequently, based on the court's directed verdict on defendants’ breach of contract counterclaim, the court entered a supplemental judgment awarding attorney fees and costs to plaintiffs.

Defendants appeal, raising five assignments of error. Defendants contend that the trial court erred in (1) concluding plaintiffs’ claim for declaratory relief was justiciable and declaring that defendants were strictly liable under ORS 465.255(1)(a) ; (2) determining that neither the as-is clause nor Addendum E constituted "an agreement to insure, hold harmless or indemnify" defendants from liability under ORS 465.255(5) ; (3) failing to evaluate ORS 465.257 with respect to defendants’ counterclaim for contribution; (4) granting a directed verdict on defendants’ breach of contract counterclaim; and (5) awarding plaintiffs’ attorney fees and costs under the contract. We consider each of the assignments in turn.

II. ANALYSIS
A. Justiciable Controversy

Plaintiffs brought a declaratory judgment action, seeking a judicial declaration under the Declaratory Judgments Act, ORS 28.010 to 28.160, that defendants were strictly liable for any remedial action costs arising from cleaning up the heating oil contamination associated with the property. On appeal, defendants argue that plaintiffs’ claim is not justiciable because the full amount of remedial action costs have not yet been incurred. The issue regarding justiciability of the parties’ dispute is a challenge to the trial court's subject matter jurisdiction. Beck v. City of Portland , 202 Or. App. 360, 368, 122 P.3d 131 (2005). We review legal conclusions regarding jurisdiction for errors of law. Hill v. City of Portland, 296 Or. App. 470, 475, 439 P.3d 564 (2019).

Under the Uniform Declaratory Judgments Act, courts "have power to declare rights, status, and other legal relations, whether or not further relief is or could be claimed." ORS 28.010. The courts’ authority to issue declaratory judgments, however, is constrained by statutory justiciability requirements. ORS 28.020 provides:

"Any person * * * whose rights, status or other legal relations are affected by a * * * statute, * * * may have determined any question of construction or validity arising under any such * * * statute, * * * and obtain a declaration of rights, status or other legal relations thereunder."

The Oregon Supreme Court has held that a controversy is only justiciable when there is an actual and substantial controversy between parties having adverse legal interests. Cummings Constr. v. School Dist. No. 9 , 242 Or. 106, 111, 408 P.2d 80 (1965). Specifically, there are "two irreducible requirements" to establish justiciability: (1) the dispute must involve "present facts" as opposed to a dispute which is based on future events of a hypothetical issue; and (2) a prevailing plaintiff can receive "meaningful relief" from a losing defendant through a binding decree as opposed to an advisory opinion. Hale v. State of Oregon , 259 Or. App. 379, 384, 314 P.3d 345 (2013), rev. den. , 354 Or. 840, 326 P.3d 77 (2014).

When a dispute "involves the interpretation of an existing statute that could apply to a party in the future, that situation itself creates a present fact." Hale , 259 Or. App. at 384, 314 P.3d 345. The Oregon Hazardous Waste and Hazardous Materials Act, ORS chapter 465, imposes strict liability on certain owners or operators for remedial action costs incurred by a release of hazardous waste. Specifically, ORS 465.255(1) provides:

"The following persons shall be strictly liable for those remedial action costs incurred by the state or any other person that are attributable to or associated with a facility and for damages for injury to or destruction of any natural resources caused by a release:
"(a) Any owner or operator at or during the time of the acts or omissions that resulted in the release.
"(b) Any owner or operator who became the owner or operator after the time of the acts or omissions that resulted in the release, and who knew or reasonably should have known of the release when the person first became
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2 cases
  • Stockton v. Mee
    • United States
    • Oregon Court of Appeals
    • December 29, 2022
    ...legal error, considering the evidence in the light most favorable to the party against whom the verdict was entered." Rudder v. Hosack, 317 Or.App. 473, 484-85, 506 P.3d 1156, rev den, 370 Or. 56 (2022). The grant of a directed verdict against a plaintiffs claim "is appropriate only when th......
  • State v. McClain
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