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
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[* 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
