Rosenblatt v. Exxon Co., U.S.A.

MURPHY, Chief Judge. This case involves the question whether, under Maryland law, a subsequent occupier of commercial property has a cause of action in strict liability, negligence, trespass, or nuisance, ⁶³ for economic losses sustained, against a former occupant whose activities during its occupancy allegedly caused the property to become contaminated by toxic chemicals. I In July 1986, Thomas Rosenblatt leased a parcel of real property located in Prince George’s County, Maryland, from its owner, Earl Wenger. The lease agreement contained the language that Rosenblatt was accepting the property “as is.” Rosenblatt planned to open and operate a “Grease-N-Go” automotive quick lubrication business on the property.

Rosenblatt’s rental payments were contingent upon his obtaining a special exception to permit the operation of the business and a building permit for construction. The previous tenant, Exxon Company, U.S.A., had leased the property from 1951 to 1985, and had subleased the property during that period to various independent dealers for use as a gasoline station. 1 In 1951, Exxon 2 had installed gasoline storage tanks on the property; the tanks remained on the property until 1985, when Exxon’s lease was terminated. In preparing for the construction of his “Grease-N-Go” facility, Rosenblatt hired ATEC Environmental Consultants (ATEC) to perform a geotechnical study of the property to identify potential construction problems. In ATEC’s initial report, dated January 30, 1987, it noted the presence of a “very strong” hydrocarbon odor in soil and groundwater samples, and it recommended that a separate environmental study be performed to determine whether hydrocarbon contamination was present. ⁶⁴ In May 1988, the special exception was granted, and in October 1988, Rosenblatt began paying rent on the property.

In January 1989, Rosenblatt notified Exxon of the possible contamination. Exxon responded to Rosenblatt by letter dated February 9, 1989, stating that the ATEC report was a geotechnical report rather than an environmental report, that there was “no factual basis” to believe that there was contamination, and that it “had no further responsibility at this time.” Rosenblatt thereafter requested that ATEC complete an environmental assessment of the property. In March 1989, ATEC conducted a study and found extensive petroleum contamination of the soil and groundwater on the property, specifically benzene, a known carcinogen, and other toxic substances. As a result of this discovery, the Maryland Department of the Environment was notified, conducted an investigation, and issued a Notice of Violation, advising that the contamination constituted a violation of Maryland law, and requiring Exxon to perform a hydrogeological study of the property.

Exxon commenced its study in May 1989, and thereafter undertook a remediation of the property. The State’s Hazardous and Solid Waste Management Administration informed Rosenblatt and Wenger that construction efforts could continue but would have to be coordinated with Exxon’s remediation efforts. In January 1990, Rosenblatt filed suit against Exxon in the Circuit Court for Prince George’s County, seeking economic damages, including expenses incurred as a result of the contamination and lost future profits from his planned business. 3 His complaint included counts of negligence, strict liability, trespass, nuisance, and other counts not here at issue. ⁶⁵ Shortly thereafter, in March 1990, Rosenblatt was informed by the bank to which he had applied for financing that it would not finance the “Grease-N-Go” project, in part because of the environmental condition of the property. Without this financing, Rosenblatt was unable to start his business.

In April 1990, the case was removed to the United States District Court for the District of Maryland, where Exxon filed a motion for summary judgment on all counts. Rosenblatt filed a motion to amend his complaint to include as defendants the independent service station operators. The court (Hargrove, J.) granted Exxon partial summary judgment on the counts not here at issue, and granted Rosenblatt’s motion to amend. On August 14,1991, the federal court remanded the remaining counts of negligence, strict liability, trespass, and nuisance against Exxon and the independent operators to the circuit court.

Exxon and two of the operators, Flaherty and Savard, filed motions for summary judgment in the circuit court on the remaining counts. On July 13, 1993, the court (Woods, J.) granted the motions, stating that Maryland law does not provide tenants of commercial property with a cause of action based upon negligence, strict liability, trespass or nuisance against previous tenants of the property. The court stated that these tort claims were available only to occupants of neighboring land or others to whom a duty was owed by the defendant. Thereafter, the court entered an order granting summary judgment to the remaining two defendants, Kwak and Lee, who were pro se, and final judgment in favor of all defendants.

Rosenblatt appealed to the Court of Special Appeals. We granted certiorari prior to review by the intermediate appellate court to consider the issues presented in this appeal. II Rosenblatt argues that an occupier of land should have a cause of action in strict liability against a prior occupier whose abnormally dangerous activity contaminated the land. He ⁶⁶ acknowledges that this principle has heretofore been applied in Maryland to actions by occupants of neighboring land, rather than subsequent occupiers of the same land.

He argues, however, that the policies underlying the strict liability principles support their extension to the instant case. He observes that courts in two other jurisdictions have held that subsequent occupiers may sue under a theory of strict liability and urges that Maryland join those jurisdictions. Rosenblatt contends that the transport, storage and dispensing of gasoline constitute abnormally dangerous activities. He urges that Exxon, as an enterprise engaging in such activities, should bear the risk of harm resulting therefrom.

Exxon’s liability, he asserts, should not be limited to adjacent property owners. He suggests that although Exxon and Rosenblatt were not neighbors geographically, they were “neighbors in time.” He urges that it “makes no sense” to allow a geographic neighbor of the affected property to maintain a strict liability cause of action, but not to allow one who subsequently comes into possession of the contaminated property to do so. He suggests that a restriction on the doctrine of strict liability to claims involving neighboring landholders would serve to exonerate tenants who have contaminated a property and then moved on. He argues further that a cause of action in negligence should also be available to the subsequent occupier of contaminated land.

He says that a subsequent occupier of contaminated land is owed a tort duty by a prior occupier because it is foreseeable that contamination from the activities of a prior occupant will harm subsequent occupants. Because Exxon was a lessee, he contends that it was foreseeable to the company that a subsequent lessee would be harmed by Exxon’s failure to exercise care in the conduct of its business. Moreover, he suggests that Exxon, because it is in the business of producing, handling, storing and marketing petroleum products, should be held to a high degree of care in conducting its business. He maintains that Exxon was aware of the risk of petroleum products leaking from underground storage tanks and was also aware that measures could be taken to ⁶⁷ reduce the risk of leakage.

Thus, he concludes, it owed a duty to Rosenblatt to prevent such harm. Rosenblatt asserts that a subsequent possessor of land may also bring a claim of trespass against a prior occupant of the same land. He maintains that when a prior occupant creates a condition on land that interferes with the subsequent occupant’s interest and exclusive possession of the land, there is a trespass. He contends that there is no requirement that the property be in the possession of another at the time of creation of the condition.

He claims that when property changes hands, but the presence of contamination placed there by the former occupant continues so that it invades a new possessor’s interest, a continuing trespass has occurred. He asserts that by causing hydrocarbon contamination of the property, Exxon has interfered with Rosenblatt’s interest in the exclusive possession of his land and thus is liable for a continuing trespass. Moreover, Rosenblatt contends that a subsequent occupant of contaminated land has a cause of action in nuisance against a prior occupant whose contamination of the property interferes with the subsequent occupant’s interest in the private use and enjoyment of the property. He argues that the nuisance doctrine is not limited to interference with an adjacent landowner’s use of land, but should be extended to an occupant of land previously occupied by the one who created the damage.

Exxon and the independent operators (collectively Exxon) aver that causes of action traditionally available only to geographical neighbors should not be extended to subsequent occupants of property. Exxon argues that, unlike a contemporary occupier of land, a subsequent occupant can avoid harm simply by investigating prior to occupying the land. As to the strict liability claim, Exxon argues that the doctrine of abnormally dangerous activities is designed not to protect the actor’s own property but the property of its neighbors, who cannot avoid the harm resulting from the activity. It maintains that Maryland law has applied the ⁶⁸ doctrine of strict liability only in situations where something on someone’s land escapes to the land of another, rather than onto one’s own land.

With regard to the negligence claim, Exxon argues that it owed no duty to Rosenblatt because there was no relationship between Exxon and Rosenblatt. It states that courts from other jurisdictions have specifically declined to create such a duty based upon the absence of foreseeability. It asserts that the doctrine of caveat emptor places the risk of defects in the land upon the prospective tenant, particularly where, as here, the tenant enters into an “as is” lease. With regard to the trespass issue, Exxon contends that trespass is concerned only with the rights and obligations of occupiers of adjoining land.

For a continuing trespass to occur, it says that there must be an original tortious placing of something on the land of another. And finally, as to the claim of nuisance, Exxon states that private nuisance, like trespass, is a cause of action involving conflicts between neighboring contemporaneous landowners and that Maryland’s application of these tort principles excludes nuisance claims between tenants of the same property. Exxon concludes by stating that the extension of the above tort causes of action to the instant case would be contrary to sound public policy because it would vitiate contract principles, create uncertainty, and interfere with the market’s allocation of resources and risks. It urges that to allow recovery in the instant case would, in effect, create a claim in perpetuity.

It contends further that it is unnecessary to allow these actions, particularly where there is an involved regulatory scheme relating to the underground storage of gasoline and related activities, thus assuring that a possessor of land will never have complete license to pollute the land. Ill Summary judgment is properly granted if there is no genuine dispute as to any material fact and the moving party is entitled to judgment as a matter of law. Maryland Rule 2- ⁶⁹ 501; Keesling v. State, 288 Md. 579, 583 , 420 A.2d 261 (1980). The standard to be applied in reviewing a trial court’s grant of summary judgment is whether the court was legally correct; when granting summary judgment, the trial court decides issues of law, not fact.

Decoster v. Westinghouse, 333 Md. 245, 261 , 634 A.2d 1330 (1993); Rosenberg v. Helinski, 328 Md. 664, 674 , 616 A.2d 866 (1992), cert. denied, - U.S. -, 113 S.Ct. 3041 , 125 L.Ed.2d 727 (1993); Heat & Power v. Air Products, 320 Md. 584, 591-92 , 578 A.2d 1202 (1990). We here determine whether the trial court was legally correct in concluding that Exxon was entitled to judgment as a matter of law on Rosenblatt’s strict liability, negligence, trespass and nuisance claims. A The Strict Liability Claim We have long recognized the doctrine of strict liability, derived from the rule of Rylands v. Fletcher, 4 See Baltimore Breweries Co. v. Ranstead, 78 Md. 501 , 28 A. 273 , 27 L.R.A. 294 (1894); Susquehanna Fertilizer Co. v. Malone, 73 Md. 268 , 20 A. 900 , 25 Am.St.Rep. 595 (1890). The rule enunciated in Rylands provided that “the person who, for his own purposes, brings in his lands and collects and keeps there anything likely to do mischief if it escapes must keep it in at his peril; and if he does not do so, is prima facie answerable for all the damage which is the natural consequence of its escape.” Fletcher v. Rylands, L.R. 1 Ex. 265, 279 (1866).

Rylands involved damage to the plaintiffs coal mine resulting from the escape of water from the defendant’s reservoir. We adopted the modern version of the strict liability doctrine in Yommer v. McKenzie, 255 Md. 220 , 257 A.2d 138 (1969). We therein adopted the definition set forth in § 519 of the Restatement (Second) of Torts (1965). Section 519 pro ⁷⁰ vides that “one who carries on an abnormally dangerous activity is subject to liability for harm to the person, land or chattels of another resulting from the activity, although he has exercised the utmost care to prevent the harm.” Unlike the rule first enunciated in Rylands, this definition does not limit applicable activities to those causing an “escape” of something onto the land of another; it requires only that there be harm to the person or property of another resulting from the abnormally dangerous activity. 5 In Yommer , an owner of residential property brought a claim against the owners of a gasoline station immediately adjacent to the residential property after gasoline leaked into the property owner’s well.

We there held that the doctrine of strict liability applied because, while “the operation of a gasoline station [did] not of itself involve ‘a high degree of risk of some harm to the person, land or chattels of others,’ the placing of a large underground gasoline tank in close proximity to the appellees’ residence and well ... involve[d] such a risk, since it [was] not a matter of common usage.” 255 Md. at 224-25 , 257 A.2d 138 . We stated that the most crucial factor in determining whether an activity was abnormally dangerous was the “appropriateness of the activity” to the place in which it was carried on. Id. at 225 , 257 A.2d 138 . We noted that the distinction between “natural” and “non-natural” uses served to limit the application of the rule, a limitation that was necessary to avoid unduly burdening landowners.

We quoted from Toy v. Atlantic Gulf & Pacific Co., 176 Md. 197, 212-13 , 4 A.2d 757 (1939), where we stated the circumstances in which the rule of Rylands would be applied: “The measure of duty thus imposed on the occupier of premises made him practically an insurer of his neighbors from such damage, and neither the absence of negligence on the part of the occupier nor the precaution taken was material to his liability. If carried to its logical consequences, the rule would impose grievous burdens as incident ⁷¹ to the ownership of land, and therefore the courts have strictly limited the application of the rule. The basic concept underlying the rule is that a person who elects to keep or bring upon his land something which exposes the adjacent land or its owner or occupant to an added danger should be obliged to prevent its doing damage. So, it follows that if the escape be of oil, gas, electricity, explosives, sewage or water artificially accumulated and stored and damage is done to an adjacent property, the occupier is within the rule.” In Toy , we declined to extend the abnormally dangerous activity doctrine to situations in which the alleged tortfeasor was not the owner or occupier of land.

Id. at 213 , 4 A.2d 757 . In that case, the defendant was a contractor who was dredging a canal and disposing of dredged material on government land which was adjacent to the plaintiffs’ land. The plaintiffs brought suit when an embankment, constructed by the government to confine the excavated material, collapsed, causing a large mass of earth to obstruct a channel which provided plaintiffs access to their land by boat. We stated that because the defendant had no right of ownership or control of the site, its liability was limited to negligence, and could not be enlarged, under the circumstances, to a liability without fault.

Id. at 213-14 , 4 A.2d 757 . We similarly limited the doctrine in Kelley v. R.G. Industries, Inc., 304 Md. 124 , 497 A.2d 1143 (1985), holding that it was not applicable to hold the manufacturer or marketer of a handgun liable to a person injured by the handgun during the course of a crime. We said: “The thrust of the doctrine is that the activity be abnormally dangerous in relation to the area where it occurs. If a gasoline station owner has faulty tanks which leak gasoline into the underground water supply, that might be abnormally dangerous if the land in which the tanks are buried is located in a well populated area.

In such a situation, the hazard bears a relation to the occupation and location of the land on which the activity occurs. The dangers inherent in the use of a handgun in the commission of a crime, on the ⁷² other hand, bear no relation to any occupation or ownership of land. Therefore, the abnormally dangerous activity doctrine does not apply to the manufacture or marketing of handguns.” 304 Md. at 133 , 497 A.2d 1143 (citations omitted). Thus, we have applied the doctrine only to claims by an occupier of land harmed by an activity abnormally dangerous in relation to the area, which is carried on by a contemporaneous occupier of neighboring land.

We are here asked to expand the application of this doctrine to claims by subsequent occupants of the land on which the dangerous activity took place. Rosenblatt relies primarily upon cases from two jurisdictions where recovery was allowed under a strict liability theory to subsequent occupiers of property contaminated by a previous occupant. In T & E Industries v. Safety Light Corp., 123 N.J. 371 , 587 A.2d 1249