Storing Heating Oil In Residential Tank Is Not An Abnormally Dangerous Activity In New Jersey

The Appellate Division recent held that the storage of home heating oil in an underground storage tank is not an abnormally dangerous activity.  In Ross v. Lowitz, the plaintiffs, John and Pamela Ross, owned property that was contaminated by heating oil that migrated on to their property from an adjacent property that was owned by defendant, Lowitz, and previously owned by defendant, Ellman.  Both individual defendants had insurance.

Prior to purchasing her property from Ellman, Lowitz had the underground heating oil tank (“UST”) tested, which did not detect any leaks.  Lowitz also maintained heating oil supply contracts with heating oil vendors who never reported any problems with the UST.

In 2003, Lowitz entered an agreement to sell her property.  Prior to closing the sale, the UST was tested again, which revealed a leak.  The sale did not go forward.

In 2004, plaintiffs purchased their property, which was adjacent to Lowitz’s property.  In 2007, plaintiffs signed a contract to sell their property and at about the same time were informed that contamination from Lowitz’s property had migrated on to their property.  Consequently, the plaintiffs’ buyers canceled the contract.

Plaintiffs filed a lawsuit against the individual defendants (Ellman and Lowitz) and their insurance companies seeking damages.  The plaintiffs alleged negligence, strict liability, Spill Act liability, trespass, nuisance and breach of the covenant of good faith and fair dealing against the insurance companies.

The trial court entered an Order providing relief to the plaintiffs during the cleanup, which included payment of plaintiffs’ carrying cost on their mortgage and repairing certain damage to plaintiffs’ property.  The cleanup of the contamination was eventually completed and the New Jersey Department of Environmental Protection issued a no further action letter.  The cleanup was paid entirely by the defendants’ insurance companies.  Because the cleanup was completed, plaintiffs dismissed their claims under the Spill Act and the common law theory of strict liability.

As to the remaining claims, the defendants filed motions for summary judgment, which were granted by the trial court.  Plaintiffs appealed, and the Appellate Division held that liability for private nuisance and trespass is not imposed without proof of some fault, i.e., negligence, or an intentional or hazardous activity requiring a higher standard of care.  The Court further observed that strict liability is only applicable where the injury was caused by abnormally dangerous or intentional conduct.

Although the strict liability claim had been dismissed, the Court analyzed whether strict liability could be imposed under common law theories of nuisance or trespass.  The Court concluded that a homeowner’s use of an underground storage tank for storing home heating oil is not an abnormally dangerous activity for which strict liability may be imposed.  The Court further held that the individual defendants acted diligently and reasonably to maintain the USTs and that the discharge of heating oil was not the result of defendants’ negligent or intentional acts.  As such, the Court affirmed the dismissal of plaintiffs’ negligence, nuisance and trespass claims.

As to the insurance company defendants, the Appellate Division also affirmed the trial court’s decision that there was no basis as a matter of law for plaintiffs to assert direct claims against the defendant insurance companies.  Moreover, the Court determined that plaintiffs were not third party beneficiaries of the insurance policies, which would have entitled them to make a direct claim against the policies.