JBG/Twinbrook Metro Ltd. Partnership v. Wheeler

RODOWSKY, Judge. The plaintiff in this case appeals from a judgment on a jury verdict in favor of the defendants in an action for damages based on the subsurface percolation of gasoline into plaintiffs land from a gasoline service station on adjacent land. The issues concern the construction of Maryland Code (1982, 1996 Repl.Vol.), § 4-409(a) of the Environment Article (Env.), the applicability of assumption of the risk to what the parties have treated as a claim of trespass quare clausum fregit, and the sufficiency of the plaintiffs evidence to establish liability for trespass on the part of two oil companies which at different times sold gasoline to the service station owner and operator. Bobby Joe Wheeler (Wheeler), one of the defendants below, owns and operates the service station.

For five or more years prior to 1982 the station dispensed Gulf brand gasoline, the product of Gulf Oil Corporation, a predecessor of the defendant Chevron U.S.A. Inc. (Chevron). 1 Since 1990 Wheeler has sold Exxon brand gasoline, the product of the defendant, Exxon Company, U.S.A. (Exxon). The station is located in Montgomery County at 1901 Rock-ville Pike, on the southeast corner of Rockville Pike and ⁶⁰⁵ Thompson Avenue. 2 The station fronts approximately 150 feet on Rockville Pike and extends to the east approximately 165 feet along the south side of Thompson Avenue. The underground storage tanks (USTs) are in the southwest quarter of the service station property, the nearest approximately eighty-eight feet from the eastern border of the station.

The eastern boundary of the station abuts the western boundary of a parcel extending along the south side of Thompson Avenue to Chapman Avenue and known as 1901 Chapman Avenue. This property is owned by the plaintiff, JBG/Twin-brook Metro Limited Partnership (JBG), and it is improved by a three-story masonry office building with basement built in 1960. The office building sits on the southerly half of the property at 1901 Chapman Avenue, with the building’s west wall approximately 100 feet from the boundary with the gasoline station. An embankment along the property line slopes down from the gas station elevation to an asphalt paved parking lot (the West Lot) that lies between the foot of the embankment and a walkway in front of the entrance located on the west side of the office building.

Another asphalt paved parking lot on 1901 Chapman Avenue lies between the north side of the office building and Thompson Avenue (the North Lot). A single entrance/exit serves both lots on Thompson Avenue. Gasoline floats on water, and subsurface, free phase gasoline can float on underground water and be carried in the direction of the water flow. The generalized ground water flow for the two properties is from southwest to northeast, that is, from the USTs in the southwest corner of the gas station to its northeast corner which abuts the northwest corner of 1901 Chapman Avenue.

Chevron originally developed the Rockville Pike property as a service station, leased it to Wheeler in 1976, and sold it to ⁶⁰⁶ Wheeler in September 1978. Included in the sale were the then existing USTs. Sometime in 1978 or 1979 the station manager discovered a hole in one of the USTs, and the hole was subsequently patched. Chevron continued to supply Wheeler with gasoline through 1981.

From 1982 until 1990 Wheeler operated the service station independently of any affiliation with an oil company, purchasing gasoline from independent distributors. In September 1990 Wheeler entered into an agreement with Exxon under which Wheeler agreed to sell Exxon products exclusively for ten years in consideration of Exxon’s paying $488,300 for remodeling the station and installing new USTs and dispensers. Two months later, when the old USTs were unearthed and removed, under the supervision of the Maryland State Department of Environment (MDE), two of the old tanks were found to contain holes. 3 MDE ordered Wheeler to remove approximately 1,600 tons of contaminated soil from his property and to install monitoring wells (MWs) to determine whether any gasoline had migrated from the tank site. In January 1991 readings from these wells indicated that gasoline had migrated throughout the service station property.

At the direction of MDE, Wheeler installed additional wells on his property and, with the permission of the then adjoining property owner, Equitable Life Assurance Society (Equitable), placed wells on 1901 Chapman Avenue. Wheeler also began removing free phase gasoline from the subsurface of the service station property. After undertaking a preliminary investigation, JBG, on February 8, 1991, entered into a contract with Equitable to purchase for $28.5 million a portfolio of investment properties in the Twinbrook Metro area of Montgomery County that included 1901 Chapman Avenue. Under the contract JBG had sixty days to complete a due diligence analysis. ⁶⁰⁷ JBG hired Hygienetics Inc. (Hygienetics) to perform an environmental analysis of all of the properties.

An initial report of March 27, 1991, identified 1901 Chapman Avenue as having the potential for an on-site contamination from off-site sources. On April 5, 1991, Hygienetics then reported “the discovery of free phase gasoline at the 1901 Chapman Avenue site.” This second report states that “[a]t least 6.5 feet of gasoline has been confirmed to exist in monitoring well MW-5” and that the contamination is “believed [to be] a direct result of a release [of gasoline] from a UST at the adjacent Rockville Service Center Exxon.” 4 A third report prepared by Hygienetics and submitted to Equitable on April 10, 1991, identified “[t]he existence of approximately two feet of free product at MWW-7.” 5 This report indicated that “the current recovery operation is inadequate ...” and observed that “[t]he existence of free product in MWW-7 suggests that the plume [of free phase gasoline] may be approaching the building foundation.” Within the first two weeks of MDE’s having ordered remediation, approximately 500 gallons of free phase, subsurface gasoline were recovered by use of a product skimmer from a well on the station site. Wheeler’s employees hand-bailed a few hundred additional gallons. Wheeler also installed a remediation system that recovered free phase gasoline and contaminated ground water from a well located at the Thompson Avenue entrance of 1901 Chapman Avenue.

From there the liquids were pumped to a facility erected in the northeast corner of Wheeler’s property where the gasoline was separated and the water treated. By ⁶⁰⁸ April 1991 approximately seventy-five gallons of gasoline had been recovered through this system. JBG expressed its concern to Equitable over the inclusion of 1901 Chapman Avenue in the properties to be purchased. Equitable then obtained from MDE an estimate of $150,000 as the total cost of the corrective work, apparently on both the Exxon station and the office building sites.

MDE had ordered Wheeler to pay for the corrective work. By letter of April 10, 1991, to JBG, Equitable proposed the following indemnification: “In the unlikely event that the service station fails to pay for the corrective action, and the State goes after JBG for this cost, Equitable will pay for the direct cost of state required correction/clean-up not to exceed $150,000.” JBG accepted the indemnity approach to their concern, agreed upon a more specifically drafted indemnification, and took title to 1901 Chapman Avenue by a deed dated April 16, 1991. The representative of JBG’s management testified that management believed at the time of closing that the contamination was confined to the northwest corner of the West Lot, away from the office building, and that the contamination would be removed. After JBG took title the monitoring wells on its property were relatively free of contamination.

In the spring of 1992, however, the amount of free phase gasoline on the station site was found to be increasing, elevating the risk that the plume would enlarge on the plaintiffs property. In order to determine if this were so, MW-12 was sunk on the West Lot, approximately thirty feet from the northwest corner of the office building, and MW-13 was sunk near the west end of the North Lot. On July 8, 1992, there was approximately one-half inch of free gasoline in MW-12, and on July 28, 1992, there were five inches of free floating product in that well. Also on July 8, over three feet of free product was found in MW-15 located in the northwest portion of the West Lot.

Eventually twelve monitoring wells were dug in the Chapman site, nine in the service station site, and two others on the opposite side of Thompson Avenue from the two properties. ⁶⁰⁹ There was evidence that by the first quarter of 1993 the plume of underground gasoline, extending in a southwesterly-northeasterly direction from the UST area of the station lot, had spread throughout most of the service station, approximately one-half of the West Lot on 1901 Chapman Avenue, and the northwest corner of the North Lot. Because of the odor of gasoline on the West Lot, JBG installed a vapor alarm and ventilation system in the basement of its building and imposed a no smoking ban on the parking lots. By December 1992 MDE assumed primary responsibility for the cleanup of both properties. There was evidence that the plume gradually shrank so that by November 1995 the free floating product was confined to a relatively small area immediately adjacent to the USTs on the station site.

JBG instituted the instant action in August 1992. The plaintiffs third amended complaint alleged that Wheeler, Chevron, and Exxon were liable, based on a statutory cause of action under Env. § 4-409(a) and on common law claims of trespass, negligence, nuisance, and strict liability. Summary judgment was granted in favor of the defendants on the strict liability claim, 6 and JBG does not contest that ruling on this appeal. After twelve days of testimony before a jury the circuit court submitted the case on special interrogatories that permitted the jury to consider separately each of the four remaining theories of liability.

In addition, and over JBG’s objection, the court submitted to the jury the issue of whether the plaintiff had assumed the risk of loss and injury as to all theories of liability other than nuisance. The jury found that all defendants-appellees had violated Env. § 4-409(a) and had trespassed on the plaintiffs property but that no defendant had been negligent or committed a nuisance. The jury fur ⁶¹⁰ ther found that the plaintiff had “voluntarily assumed the risk of contamination with full knowledge and understanding at the time it purchased the 1901 Chapman property.” Based on the jury verdict the circuit court entered judgment in favor of all defendants, ie., the circuit court held that assumption of the risk was an absolute defense to the § 4-409(a) cause of action and to trespass. JBG appealed to the Court of Special Appeals, and this Court granted certiorari on its own motion prior to consideration of the matter by the Court of Special Appeals.

Here, JBG contends that the circuit court erred in submitting assumption of the risk to the jury on the statutory and trespass claims. Wheeler, Chevron, and Exxon all contend that assumption of the risk is available as to both claims. In addition, Chevron and Exxon contend that, even if assumption of the risk is not a defense, JBG’s evidence is legally insufficient to establish liability against those defendants. I In this Part I we consider the count asserting the statutory cause of action.

Env. § 4-409(a) reads: “The person responsible for the oil spillage shall be liable to any other person for any damage to his real or personal property directly caused by the spillage.” 7 ⁶¹¹ JBG argues that the above-quoted section imposes strict liability, or liability without regard to fault, with the result that an assumption of the risk defense is incompatible with the legislative purpose of the statute. The defendants contend that nothing in the statutory language abrogates ordinary defenses and that any such abrogation must be accomplished by specific language. Section 4-409(a) is part of Env. Title 4, “Water Management,” Subtitle 4, “Water Pollution Control and Abatement.” JBG calls Subtitle 4 “a comprehensive statute addressing the problems created by oil pollution” and cites Env. § 4-410(a) as a flat prohibition against “the discharge of oil and other petroleum products into the waters of the state.” Brief of Appellant at 6. “Waters of this State” is a defined term in Env.

Title 4 and includes both surface and underground waters. Env. § 4-101.1(d)(1). Env. § 4-410(a) provides: “Except in case of emergency imperiling life or property, unavoidable accident, collision, or stranding, or as authorized by a permit issued under § 9-323 of this article, it is unlawful for any person to discharge or permit the discharge of oil in any manner into or on waters of this State.” In Subtitle 4 “oil” is defined to include gasoline. Env. § 4-401(g)(1)(ix).

Thus, as the parties have argued the issue concerning assumption of the risk, the question is the construction of § 4-409(a). Examination of the legislative history of § 4-409(a) as an aid to construction reveals, however, that it does not apply to the facts of the instant matter; rather, “the spillage” referred to in the statute is spillage from a vessel, ship, or boat. Unfortunately, the legislative history is quite tangled, and the subject statutes became embroiled in a “turf battle” that raged between the Department of Natural Resources (DNR) and the Department of Health and Mental Hygiene (DHMH) prior to the creation of MDE. In our review we shall refer to § 4-409(a) and its antecedents as the “Private Remedy Section” and to § 4-410(a) and its antecedents as the “Prohibition.” ⁶¹² The Prohibition was enacted by Chapter 239 of the Acts of 1949 and was codified in Maryland Code (1951) as Article 66C, “Natural Resources,” § 40(a).

It read: “Except in case of an emergency imperiling life or property, or unavoidable accident, collision, or stranding, it shall be unlawful for any person to discharge or permit the discharge of oil in any manner into or upon the waters within the jurisdiction of the State of Maryland from any vessel, ship or boat of any kind.” Criminal penalties were provided for violations. 8 Id. § 40(b). There was no Private Remedy Section at that time. By Chapter 73 of the Acts of 1964, the Prohibition was recodified and renumbered as Md.Code (1957, 1964 Repl.Vol.), Article 96A, title, “Water Resources,” subtitle, “Pollution Abatement,” § 26. Wild v. State, 201 Md. 73 , 92 A.2d 759 (1952), was an appeal from a conviction for violation of the Prohibition, as quoted above.

In Wild , “we assume[d], without deciding, that proof of scienter is necessary under this statute,” id. at 77 , 92 A.2d at 761 , but held that the “evidence was legally sufficient to support a finding of actual knowledge ... that oil was in the water alongside the ship, and presumably escaping from the ship, at least two hours before the cause was found and corrected.” Id. at 78 , 92 A.2d at 761-62 . The statutes relating to water pollution were further revised by Chapter 243 of the Acts of 1970. It recodified the Prohibition as Article 96A, § 29(a), without change. Chapter 243 also enacted new §§ 29A and 29B.

Section 29A obliged the Maryland Port Authority (MPA) and DNR to develop a program for responding to “an emergency oil spillage,” and § 29B provided that those agencies “shall charge and collect a compensatory fee from the person responsible for the oil spillage” to cover cleanup costs. ⁶¹³ The Private Remedy Section was enacted by Chapter 504 of the Acts of 1971. Chapter 504, inter alia, added new §§ 29AB and 29BC to then Article 96A. Section 29AB(a) required the posting of a bond based upon the gross tonnage of oil cargo on behalf of every vessel entering Maryland waters to discharge or receive a cargo of oil in excess of twenty-five barrels. Section 29AB(a) further provided that “[i]f the [MPA] or the [DNR] determines that oil has been discharged or spilled into the waters of the State from the vessel, the bond shall be forfeited, to the extent of the costs incurred by the [MPA] or the [DNR] in eliminating the residue of the oil discharge or spillage ... and to the extent of any otherwise uncollectible fines----” Section 29BC is the Private Remedy Section.

Its language as enacted in 1971 (“The person responsible for the oil spillage shall be liable to any other person for any damages to his real or personal property directly caused by the spillage.”) is for all practical purposes identical to the current statute in Env. § 4-409(a). The 1971 context makes plain that the “oil spillage” referred to in the Private Remedy Section is a spillage or discharge from a vessel, ship, or boat. Such a spillage or discharge is the limited object of the Prohibition in then § 29(a), of the “emergency oil spillage” plan required by then § 29A, of the bond required by then § 29AB(a), and of the compensatory fee chargeable by MPA and DNR under then § 29B. 9 ⁶¹⁴ Also at the 1971 session the General Assembly enacted Chapter 651 which added new subsection (a-1) immediately following the Prohibition in then Article 96A, § 29(a). Subsection (a-1) imposed a reporting requirement on persons “actively or passively participating in the discharge or spilling of oil[ ] into the waters of the State either from a land-based installation ... or from any vessel, ship or boat of any kind.” The existing criminal penalty provision, Art. 96A, § 29(b), was expanded to include violations of new subsection (a-1) in addition to the Prohibition.

By Chapter 356 of the Acts of 1972, the General Assembly created the “Maryland Oil Disaster Containment, Clean-up and Contingency Fund,” compare Env. §§ 4-701 through 4-708, but no change was made to the Prohibition or to the Private Remedy Section. Similarly, no changes were made to the two sections under consideration when the water pollution laws were substantially amended by Chapter 739 of the Acts of 1973. The Private Remedy Section became part of the new Natural Resources Article (NR), effective January 1, 1974, as enacted by Chapter 4 of the Acts of the first extraordinary session of 1973. Codified as NR § 8-1409, the Private Remedy Section was changed only in style (“damages” was changed to “damage”).

See Md.Code, NR (1974), Revisor’s Note following § 8-1409. The Prohibition, then codified as NR § 8-1410(a), continued to be limited to discharges of oil from “any vessel, ship, or boat of any kind.” At the 1980 session the General Assembly twice considered Subtitle 14 of Title 8 of the Natural Resources Article. Chapter 27 of the Acts of 1980 legislatively ratified an executive order reorganizing DNR and transferring certain environmental regulatory functions, including the administration of Subti ⁶¹⁵ tie 14, to DHMH. Then, by Chapter 815 of the Acts of 1980, the General Assembly reversed some of those allocations of authority, and enforcement of Title 8, Subtitle 14 was returned to DNR.

No substantive changes were made to the Private Remedy Section or to the Prohibition. The limitation in the Prohibition to discharges from a vessel, ship, or boat was deleted by Chapter 182 of the Acts of 1984 which also added the exception for discharges pursuant to a permit. The expansion by Chapter 182 of the conduct in violation of the Prohibition had the effect of enlarging those acts subject to criminal and administrative sanctions, but it did not affect the Private Remedy Section. Chapter 182 did not enlarge the Private Remedy Section by express words.

That section continued to apply to damage from “the spillage.” The Private Remedy is not expressly available for all discharges of oil that violated the Prohibition. Moreover, Chapter 182 did not broaden the Private Remedy Section by necessary implication. The legislative history of Chapter 182 does not reveal any purpose to expand the Private Remedy Section. The bill that became Chapter 182 was prepared by DNR and introduced as a departmental bill. 10 The bill report from DNR described the purpose of enlarging the Prohibition to be “to add provisions to subtitle 14 which clearly make the discharge of oil in any manner ... so as to cause pollution ... a violation of the Natural Resources Article.

Establishing a water pollution violation under subtitle 14 with regard to oil ... will enable [DNR] in its enforcement in situations of oil ... pollution to utilize the injunctive and civil penalty provisions appearing at the end of the subtitle.” (Emphasis added). The enforcement mechanisms and sanctions referred to by DNR included appropriate “legal action” by the Attorney General to correct violations of orders, NR ⁶¹⁶ (1974, 1983 Repl.Vol.), § 8-1414, injunctive relief, § 8-1415, civil penalties, § 8-1416, and criminal prosecution carrying fines, imprisonment, or both, § 8-1417. Former NR §§ 8-1409, the Private Remedy Section, and 8-1410, the Prohibition, were transferred to the new Environment Article by Chapter 306 of the Acts of 1987 as §§ 4-409 and 4-410, respectively. What currently appears as subsection (b) of Env. § 4-409 (for text see note 7, supra) was added by Chapter 67 of the Acts of 1990.

That enactment added both a definition of USTs to the subtitle, see current Env. § 4-401(k), and, in subsection (b) of § 4-409, required the “owner” of an UST to furnish evidence of financial responsibility for cleanup, corrective action, and “third party liability.” Section 4-409(b) does not define third party liability. As suggested by Env. § 4-409(b)(3), Chapter 67 of the Acts of 1990 was prompted by federal legislation, Subtitle I of the Resource Conservation and Recovery Act, now codified in subchapter IX, “Regulation of Underground Storage Tanks,” of Chapter 82 of 42 U.S.C. (§§ 6991 through 6991i). The federal act requires the United States Environmental Protection Agency (EPA) to promulgate regulations concerning USTs that include “requirements for maintaining evidence of financial responsibility for taking corrective action and compensating third parties for bodily injury and property damage caused by sudden and nonsudden accidental releases arising from operating an underground storage tank.” 42 U.S.C. § 6991b(c)(6) (1995).

The federal statute contemplates EPA approval of state programs for detection, prevention, and correction of UST releases, including requirements for maintaining evidence of financial responsibility, that are no less stringent than the corresponding federal requirements promulgated by EPA. Id. at § 6991c. The federal regulations on financial responsibility were initially promulgated October 26, 1988. 53 Fed.Reg. 43,370 (1988). ⁶¹⁷ The required amount of financial responsibility to be evidenced by the owner of from one to one hundred petroleum USTs is $1 million. 40 C.F.R. § 280.93 (b)(1) (1996). “Critics of the UST program argued that the UST regulations would run small gasoline station operators out of business, by requiring them to purchase expensive insurance policies and make large capital improvements.” A.R. Hayward, Common Law Remedies and the UST Regulations, 21 B.C. Envtl. Aff.

L.Rev. 619, 640 (1994). In its 1989 session the General Assembly enacted a bill that would have created an insurance fund for owners and operators of USTs. The Governor, however, vetoed the bill, and on May 30, 1989, he appointed a study commission. See Report of the Governor’s Task Force on Underground Storage Tanks (1990) (the Report), at 7.

The Report recommended that, even for stations having twelve or fewer USTs, the owners of the tanks should be responsible for meeting the financial assurance requirements. Report at 42-43. As introduced, the bill which became Env. § 4-409(b) implemented the Report by requiring MDE to adopt regulations placing responsibility on the owner of the UST to evidence financial responsibility. 1990 Md. Laws Ch. 67, at 457-60. The bill, however, was amended to add the special definition of owner now found in § 4-409(b)(1).

Id. at 460. But compare the more conventional definitions of an owner of an UST in use after 1984 in Md. Regs.Code tit. 26, § 10.02.04(39) (1991) (COMAR) and in 40 C.F.R. § 280.12 (1996). 11 When MDE adopted regulations for UST financial responsibility the regulations incorporated “by reference the provisions contained in 40 C.F.R. §§ 280.90-280.116 , as amended through February 18, 1993....” COMAR 26.10.11.01A. Under the incorporated federal regulations concerning financial responsibility, the compliance date in Maryland eventually ⁶¹⁸ became December 31, 1993, for UST owners in the class into which Wheeler falls. 40 C.F.R. § 280.91 (d) (1996). In the instant case we shall assume, arguendo, that the UST financial responsibility regulations make the owner of an UST an insurer against damage caused by UST leaks to the maximum required financial responsibility.

See C.C. Gauthier, The Enforcement of Federal Underground Storage Tank Regulations, 20 Envtl. L. 261 , 287 (1990) (advancing thesis that the federal regulations intend strict liability). JBG, however, does not rest its statutory cause of action on Env. § 4-409(b) (we infer, because of the December 31, 1993 compliance date). Instead, JBG rests on § 4-409(a).

The enactment of subsection (b) made no change in subsection (a), did not alter the original intent of subsection (a), and cannot retroactively enlarge the liability imposed by subsection (a) on the person responsible for the spillage from a vessel, ship, or boat to include the owner of an UST. Because § 4-409(a)