Task Oil Corp. v Xerxes Corp.
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Task Oil Corp. v Xerxes Corp. 2012 NY Slip Op 31032(U) April 2, 2012 Supreme Court, Nassau County Docket Number: 5962/2010 Judge: Anthony F. Marano Republished from New York State Unified Court System's E-Courts Service. Search E-Courts (http://www.nycourts.gov/ecourts) for any additional information on this case. This opinion is uncorrected and not selected for official publication. .... . . . . . . . . . . . . . . . . . . . . . . .. ... .. .. .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . [* 1] SHORT FORM ORDER SUPREME COURT - STATE OF NEW PRESENT: HON. ANTHONY F. MARANO Justice. YORK TRIAL/IAS PART NASSAU COUNTY TASK OIL CORP., Plaintiff, MOTION #001 INDEX # 5962/2010 -againstXERXES CORP Defendant. The following papers read on this motion: Notice of Motion Answering Papers Reply. . Motion by defendant Xerxes Corp. for an order pursuant to CPLR 2221 resettling or modifying the Order of Honorable Ira Warshawsky dated August 2011 is granted, without opposition except insofar as plaintiff cross- moves to preserve the Sixth Cause of Action , and this order shall supercede the order dated 8/3/11 (Warshawsky, J. ) which is hereby vacated. Cross -motion by plaintiff Task Oil Corp. pursuant to CPLR 2221 for reargument of so much of the order dated 8/3/11 which dismissed its Sixth Cause of Action ", [* 2] under Navigation Law ~181 is granted and upon reargument the prior determination is adhered to. Addressing the cross-motion first, a motion for reargument is designed to afford a party " an opportunity to establish that the court overlooked or misapprehended relevant facts or misapplied (a) controlling principle of law" 68 AD2d 558, 567 (Foley v. Roche, Dept 1979)). Plaintiff avers that the court was in error findng the Sixth Cause of Action premature. Plaintiff avers that actual damages in the form of attorney Navigation Law Article 12 actions against it York State, which are still Under the fees it has suffered in defense of by, inter-alia, New pending. Navigation Law only " faul tless owner deemed a discharger " solely property " and who " has paid for remediation who is by virtue of its ownership of or " been the held liable to the State Environmental Protection and Spill Compensation Fund" may pursue a section 181 (5) claim under the Navigation the party who " actually caused the discharge" Corp., Law against (State v. Tartan Oil 219 AD2d 111 (3d Dept 1996)) Plaintiff is correct that the expense he incurred of the Stp.te actions is an element of "indirect damage" under Navigation Law ~ 181 (1) and (5), and is Oil Corp., in defense 219 AD2d 111 116 supra). recoverable (State v Tartan However, plaintiff may not *** [* 3] recover that damage before it is possessed of action under the relevant provisions of the Navigation Law ~ 182 (1) a ripe cause of Navigation Law (see recoverable as indirect damages of a discharge premature not fees " may be and (5) ) . While counsel the claim until there is a finding with respect to whether or plaintiff Partners, L. was P., sum discharger " only Carter faul t (3d Dept 2007)) . 44 AD3d 1221 , 1223 seek landowner may Suburban Heating Oil indemni ty an actual if the landowner is faultless, meaning not in any way responsible for the discharge doom plaintiff' from Navigation Suburban Heating Oil Any degree of fault would cause Law Partners, L. action" Carter 44 AD3d 1221, 1222 P., supra). Unless and until plaintiff is found faultless in the Navigation Law actions against him , he is not possessed of a cause of action for indemnity. Accordingly, any possible indemnification claim for attorneys fees as indirect damages has not ripened and plaintiff' sixth cause of action was properly dismissed. Turning to defendant' s motion to reset tIe, Xerxes seeks correction of the 8/3/11 order which mistakenly referred to complaint" rather than the " Second Xerxes also seeks correction of an court failed to explicitly dismiss the Third Cause it clearly intended such dismissal. the Amended Verified Complaint" omission, averring that the of Action while [* 4] The Third Cause of Action alleged that defendants caused a petroleum discharge, and that pursuant to Art. 12 , ~ 181 (1) of the Navigation Law , defendant is liable to plaintiff for the cleanup and removal costs as well as other direct and including attorneys fees. indirect damage, The Fifth Cause of Action asserted, inter-alia, a Navigation Law Violation with damages consisting of diminution in property value . Defendant is correct that the court clearly intended dismissal of the Third Cause of Action together with the Fifth Cause of Action which both made claims for property damage under Navigation Law. the directed defendant submit Judgement" , Indeed, and the court plaintiff has submitted no opposition to the application with respect to the Third Cause of Action. Accordingly, the order of August 3, 2011 is superceded and amended as follows, with changes indicated by underlining: PRELIMINARY STATEMENT Defendant moves for summary judgment dismissing the Second Amended Verified Complaint based upon lack of privity, statute of limitations , res judicata, and failure to state a claim upon which relief can be granted. BACKGROUND Plaintiff operates a gasoline service station at 1210 Grand Avenue, Baldwin. Defendant manufacturer of underground [* 5] storage tanks (UST' service station. for petroleum for sale at the Pursuant to contract dated September 6, 1983, plaintiff purchased Xerxes petroleum storage tanks three For whatever reason , Kapco. products from the tanks which ultimately found their way onto plaintiff' s service station were apparently destined for a Gulf station on Hempstead Avenue in Malverne. There was a tank failure on October 28, 1988. On or about October 5, 2000 , the second and third tanks also failed. According to the Notice of Violation from the Nassau County Fire Marshal dated October 20, 1988, 1 tanks numbered 2 and failed. additional spill was noted by the Department of Environmental Conservation on August 7 2001 Xerxes 2001. By letter dated September 12 advised the Nassau County Department Inspections that they had inspected and repaired an 8, 000 Fire gallon tank at 1210 Grand Avenue , Baldwin , which had been in service for 1 7 years. They predicted high probability that the tank would provide long continued service, despite the fact that the cause of the 36" crack at the bottom of the tank was never determined. They acknowledged their responsibility under the terms of their limited warranty. 1 Exh. 4 to plaintiff's memorandum oflaw. 2 Exh. 5 to plaintiff's memorandum of law. [* 6] York State Department A New of Environmental Conservation (DEC) Spill Report reflected a test failure in an 8, 000 gallon tank in 2005 at 1210 Grand Avenue Baldwin. By certified letter dated October 20, 2005 the test advised that DEC Corporation on October 5, 2005 on the 8, 000 Crompco gallon super unleaded gasoline tank failed a Petrotite test with a leak rate of 1 Both tanks were directed to be taken out of dated April 12, 2006, 4 service. gph. By letter Xerxes advised the service station that their inspection of the 8, 000 gallon tank revealed large deflected the tank, areas, which would cause undue stresses on time, could lead to a crack and other structural damage. was repaired and passed a subsequent indicated that the original test. and, over The tank A Note to the letter warranty would continue, and the warranty of materials and workmanship connected with this repair would continue for one year. The cost for the 2006 repair was $10, 020. 00. Second Amended Verified Complaint dated May 11, 2010 By the plaintiff asserts FIRST: six causes of action as Breach of Contract by Darius follows: Corp. (successor- in- interest to Xerxes), in that UST' s sold by them failed in 1988, 3 Exh. 7 to plaintiff's memorandum of law. 4 Exh. 8 to plaintiff's memorandum oflaw. [* 7] 2000 and 2005 , releasing petroleum into the environment, and as a resul t , the premises are contaminated, for which plaintiff claims damages of $500, 000. 00; SECOND: Breach of Warranty in that defendant represented that the USTs were fit for use at gasoline service stations; that the expressly and impliedly warranted that USTs they distributed were fit for use at gasoline service stations and would be usable for 30 years; defendant breached its warranties by selling and providing USTs that were not designed or manufactured to contain petroleum for at least 30 years; and only one of the three USTs purchased from defendant remains fit for use, and only after a cost of approximately $20, 000. 00; and that plaintiff has been damaged in the amount of $500, 000. 00; THIRD: Violation of New York State Navigation Law, in that defendants caused , or contributed to the discharge of petroleum into the environment, and that pursuant to Art. 12, ~ 181 (1) of the Navigation Law, defendant is strictly liable to plaintiff for the cleanup and removal costs as well as other direct and indirect damage, including attorneys fees and those of expert witnesses, all of which damages exceed $500, 000. 00; FOURTH: Defendant installed and repaired the USTs negligent manner; FI FTH : As a result of the defendant' s negligence, breach of [* 8] warranty and violations of the Navigation Law , the plaintiff has sustained a diminution in the value of its property in the amount of $500, 000. 00; SIXTH: As a result of three actions in which plaintiff has been named a defendant two by New York State and one by Exxon Mobil Oil Corp., plaintiff may be required to pay an amount to be determined to reimburse them for costs incurred in and remediati on investigation of the premises and other property. DISCUSSION Plaintiff has been continuously seeking reimbursement from defendant over the past current effort 22 years. is barred by Defendants contend that the res judicata and the statute limitations. The motion to dismiss the First Cause of Action for breach of contract is granted. with defendant. The plaintiff was never a party to a contract The installer of the tanks, with whom plaintiff contracted was Kapco. A prior action in 1991 by plaintiff against Kapco and Xerxes resulted in a settlement and mutual releases. The release , dated September 3, 1998, exonerated Xerxes from any liabili ty for claims occurring prior to the date of the release with the exception of claims for indemnity for claims made by the 5 Exh. M to Motion. [* 9] state of New York. These actions, commenced in 2004, remain open. Plaintiff is unable to establish that they were the intended third- party In order beneficiaries of the contract between Kapco for a party to succeed on a claim as a third- party regarded by the beneficiary, they must establish that they were contracting parties as a de f endan t points out, beneficiary. and Xerxes. Initially, it is correct, as that the party whom originally to be made was a service station in Mal seller realized that they had the wrong deli very was verne. address, shipper for an additional 10 miles to the correct When the they paid the location. Even putting that aside, plaintiff would have the Court adopt a position that every sale by a manufacturer or supplier to a distributor, when they have knowledge of the ultimate user , would constitute a contract for the benefit of the end user. Such a holding would destroy the long- held requirement of privity of contract. The Court of Appeals has adopted the reasoning of the Restatement 2d, Contracts, with regard to the determination as to whether an alleged third- party beneficiary has enforceable rights. Under the adopted approach, incidental beneficiaries, as opposed to intended beneficiaries, do not have such Putnam Corp. v. Interstate Wrecking Co., rights. (Fourth Ocean 66 N. Y. 2d 38, 41 (1985)). The Court there concluded that the contract for the demolition of plaintiff' s fire- damaged building pursuant to a contract between [* 10] Village of Atlantic Beach and Interstate, was not intended for the benefit of the plaintiff , but rather to remove an unsightly and dangerous condition for the benefit of the It can hardly be reasoned public. that Xerxes had any particular interest in the ability of Task Oil to pump gasoline. While Task may well be considered an incidental beneficiary of beneficiaries. contract, they were not intended Plaintiff' quasi contract" s assertion of a Xerxes is nothing more than a claim for between it and (Georgia unj ust enrichment. Malone Co., Inc. 2011)). In order to succeed on a claim for unj ust plaintiff plaintiff' v. Ralph expense Rieder, 2011 WL 2638128 that the other party show mus t was is against and that N. Y. 173, Id. quoting 182 Dept. enrichment, enriched, equity and good conscience to permit (the other party) to retain what is be recovered' " the sales sought to Mandarin Trading Ltd. v. Wildenstein (2011) ) . There has been no evidence enrichment of Xerxes at the expense of plaintiff , and Xerxes has continued stand by limi tation claims, its warranties, up to the present time. statute subj ect Plaintiff' s assertion of a quasi contract is without merit and the motion to dismiss the First Cause of Action is granted. The motion to dismiss the Second Cause of Action for warranty granted. Plaintiff asserts express breach of and implied [* 11] warranties which are conclusively refuted by the language of the actual warranty. The performance warranty states that the underground tanks will , when properly installed: (1 ) Meet our published specifications and will be free from material defects materials and workmanship for a period one (1) year following date of original shipment; (2 ) of thirty Will not fail for a period (30) years from date of original shipment to two external corrosion; (3 ) Will not fail for a period of (30) years from date of original thirty purchase due to internal corrosion, provided the tank is used solely for gasoline, gasohol (90% gasoline and 10% ethanol mixture), jet fuel, diesel fuel or potable water at ambient underground temperature; for fuel oil 6 P/O or use temperatures not Exh. 3 to Plaintiff's Memorandum of Law. [* 12] exceed 150 Xerxes Corporation defect, sole liability for any its determines which reasonable discretion to be above warranty, shall be sole covered by the at Xerxes' option to repair the tank, to replace the tank F. 0 . B place of original delivery or to original purchase price. In no refund the event, shall Xerxes liability under this warranty extend to labor, installation costs, or incidental or consequential damages or losses suffered or incurred in connection there with. This warranty oral void or written installation instructions are not followed or the tank abused or misused any manner. THE WARRATIES STATED HEREIN SHALL BE IN LIEU OF ALL OTHER WARRATIES BY XERXES CORPORATION, EITHER EXPRESS IMPLIED, INCLUDING WARRATIES OF MERCHANTABILITY AN FITNESS FOR [* 13] THE PARTICULAR PURPOSE INTENDED , ALL OF WHICH ARE HEREBY SPECIFICALLY DISCLAIMED BY XERXES. PERSON ACTING OR SELLING ON BEHALF XERXES MAY AUTHORIZE ANY WARRATIES OTHER THAN THOSE SPECIFIED HEREIN. The claims against defendant for spills occurring in 2000 and 2005 are not precluded by the general release, since they occurred after its execution. Rather , they are governed by the four- year statute for breach of warranty claims pursuant to UCC ~ 2- 725. Subd. 2 of that statute provides that " (a) cause of action accrues when the breach occurs, regardless of the aggrieved party' s lack of knowledge of the breach" . In this instance the leak which plaintiff for the first time complains of occurred on October 5, 2005. the same date the DEC advised plaintiff' s tenant in possession in writing dated October 20, 2005 , a copy of which letter was sent to Stanley Coven , the president of Task, that the tank tightness test on 000 gallon tank at the premises failed. Plaintiff' assertion that they did not become aware of the incident until less than four years prior to credulity, the service of the complaint strains and is obviated by the language of the statute which begins the running of the four- year statute from the time of the breach, irrespective of the aggrieved party' s lack of knowledge of [* 14] the breach. The warranty claim for the 2000 breach has previously been determined to be barred by the four- year statute of So too is the claim for limitations. the 2005 event. Plaintiff filed its original summons and complaint on March 25, 2010, more than four years and five months from the date of the The breach. Action alleges that the defendant Fourth Cause negligently installed and repaired the USTs. barred by the All such claims are three- year statute of limitations applicable to negligence. The Fifth Cause of Action asserts that the breach of warranty, negligence and violation of the Navigation Law has resulted in The negligence and warranty claims have damage to the plaintiff. been dismissed. Navigation Law ~ 181 imposes strict liability upon the owner of property for the cost of petroleum discharge emanating from their property. However " (a) property owner who is held strictly liable for the costs of a petroleum discharge is authorized to bring a claim as an inj ured person' for the cost of cleanup and removal against a prior owner or any other party who actually (General Cas. Ins. Co. (2d Dept. 2008) The caused or contributed to the discharge" Kerr Heating Products, 48 A. 3d 512 [* 15] statute of limitations for such action is three years from the date of discovery, or the date that a party should reasonably have become aware , in the exercise of (2); (Jensen v. General reasonable Elec. Co., 82 N. diligence. CPLR ~ 214- 2d 77 (1983)). Plaintiff' s claim under the Navigation Law is therefore barred by the statute of limitations , and the motion to dismiss the Third and Fifth Cause2 of action is granted. In the Sixth Cause of Action plaintiff asserts that they may be held responsible for damages in three pending actions, two by the State of New York and one involving Exxon claims against Mobil Mobil. Plaintiff' and Xerxes based on indemnification were previously dismissed by this Court (Jonas, J:, .as prt?mature, that there was no allegation that plaintiff had been compelled to pay damages in any action , and that public policy precluded a claim for indemnification in a separate As a general accrue un t i 1 payment indemnification" 2d 758, rule, 759 has action. claim for indemnification been made does not the party seeking (State of New York v. Syracuse Rigging Co., 249 (3d Dept. 1998)) (internal citations omitted). Departure from the general rule may be warranted, ' and the issuance of a conditional judgment of indemnification appropriate, but only where the interests of justice and judicial economy so dictate. Id. [* 16] at 760. In the instant case, there is no evidence that plaintiff has had a judgment rendered against it, much less required to make payment. As such the indemnification claims are clearly premature. The motion to dismiss the Sixth Cause of Action is granted. Defendant is directed to submit Judgment in accordance with this Decision and Order. DATED: April 2, 2012 J. . Jrlt ENTERED AP 1 202 NASSAUCOUNT\ COUNTY CLERK' OFfiCE
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