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Davis Bros. v. Thornton Oil Co.

Citation: 29 ELR 20215
No. 5:96-CV-304-1 (WDO), 12 F. Supp. 2d 1333/(M.D. Ga., 07/23/1998)

The court dismisses strict liability, nuisance, trespass, and Resource Conservation and Recovery Act (RCRA) claims filed against the former sublessee of contaminated property where an underground storage tank (UST) leaked. The former sublessee operated a gasoline station at the site, which was next to a motel operated by the sublessor. The sublessee sold its interest to an intermediate sublessee. A third party, who is the current sublessee of the site, assumed the intermediate sublessee's obligations.

The court first finds that, due to contradictory evidence in the record, the issue of whether an UST leak existed at the time the former sublessee sold its leasehold interest to the intermediate sublessee is incapable of being resolved on summary judgment. Next, the court finds that the sublessor failed to present any credible evidence that the UST leak at the station damaged the neighboring motel site. The sublessor's estimate of the alleged damage is without foundation. The entire calculation rests on the assumption that a potential buyer of the motel property would have to pay for the costs of remediation and the attendant loss of revenue. This is a false premise because as admitted by the sublessor, the contamination has absolutely no impact on the motel's operations or corresponding value other than the costs of remediation, which the current sublessee already agreed to assume.

The court then holds that the sublessor's strict liability, nuisance, and trespass claims against the former sublessee are all barred by the applicable statute of limitations. The sublessor's arguments that the continued existence of contamination constitutes a continuing trespass or a nuisance, or that the statute of limitations was tolled until the leak was discovered, have been flatly rejected by Georgia courts in similar contexts. The court also holds that the sublessor's strict liability claim fails because the activity complained of — operating a gasoline station — is not ultrahazardous. There is no credible evidence that the station is in a location inappropriate for a gas station. The court further holds that the sublessor's RCRA claim fails on the merits and is moot. The sublessor presented no credible evidence supporting a finding of imminent and substantial endangerment to health or the environment. The fact that the state has ordered a cleanup of the area does not suffice to infer such endangerment. Moreover, the proposed remedy of injunctive relief is moot because the current sublessee has already agreed to remediate the site and pay for any costs associated with cleanup.

The court next holds that the settlement agreement, which was entered into by the former sublessee and the current sublessee and provides that the current sublessee will pay for all cleanup costs associated with the site, does not negate or supersede the mutual indemnity provision of the sale and purchase agreement between the former sublessee and the intermediate sublessee. The sole effect of the settlement agreement was to release the former sublessee from any claims available to the current sublessee arising out of the property. The agreement was silent with regard to claims brought by third parties against the former sublessee. The court then holds that until the issue of when the leak occurred is resolved by a jury, the former sublessee's cross-claim for attorneys fees against the current sublessee remains pending.

Counsel for Plaintiff
Alfred B. Adams III
Holland & Knight
1201 W. Peachtree St. NE, Ste. 2000, Atlanta GA 30309
(404) 817-8500

Counsel for Defendants
F. Edwin Hallman Jr.
Decker & Hallman
Marquis Two Tower
285 Peachtree Ctr. Ave., Ste. 1200, Atlanta GA 30303
(404) 522-1500