Rossaki v. NUS Corp.

EYLER, Judge. The question of first impression presented by this case is whether § 4-409 of Md.Code, Env. art. (1996 RepLVol.) creates a private cause of action for contamination of property. The trial court held that the statute did not create a private cause of action and dismissed appellants’ claim.

While we do not reach the issue of whether § 4-409 creates a private cause of action applicable in certain circumstances, we will affirm the trial court’s judgment because § 4-409 does not create a private cause of action on behalf of buyers of real property against sellers or prior occupiers of such property. Facts On January 23, 1990, Torsak Rossaki and Mayuree Rossaki (“the Rossakis”), appellants, entered into a contract to purchase certain real property from Auto Clean, Inc. (“Auto Clean”), appellee. At that time, the property was leased to Amoco Oil Company (“Amoco”) and subleased to Able Associates, Ltd. (“Able”), appellee, which operated an Amoco brand gas station and convenience store. The contract initially was subject to a financing contingency, which later was removed.

The contract did not make the sale subject to any other contingencies relevant to the issues in this case. The Rossakis did testify, however, that there was an oral agreement between the parties that the sale of the property was contingent on an inspection of the property and a finding ¹⁵ that it was not contaminated. This was denied by Auto Clean. The property was environmentally assessed prior to settlement, but the parties dispute who controlled the testing entities, i.e., Auto Clean, or the Rossakis’ lender, or both.

The parties also dispute whether the Rossakis obtained a copy of any or all of the reports relating to testing prior to settlement. In any event, American Environmental Group, Inc. was engaged to perform an environmental assessment, and in a report dated June 18, 1990, it recommended that soil analyses be performed. American Environmental Group, Inc. retained Geo Environmental, Inc. (“Geo”) to perform the analyses. An August 1990 report indicated that Geo found no significant contamination but stated that “possible contamination ... cannot be totally precluded.” The Rossakis’ lender received a copy of the Geo report and requested additional testing in the northeast corner of the property.

Additional analyses were performed by Geo, including soil borings to a depth of 10 feet. Geo reported its observations in a letter dated September 18,1990 and a report dated October 8, 1990. In the October 8 report, Geo recommended an additional analysis utilizing two bore holes to a depth of 25 feet in order to test the groundwater. NUS Corporation (“NUS”), appellee, was retained to do additional work.

A representative of NUS and a representative of Auto Clean met at the site to discuss the scope of NUS’s undertaking, but the participants recalled the conversation differently. The NUS representative testified that he asked about the groundwater and that the Auto Clean representative responded that another firm was doing the groundwater investigation. The Auto Clean representative testified that there was no discussion about groundwater. In any event, NUS performed three borings in the northeast corner of the property to a depth of 12 feet and reported its findings in a letter dated December 7, 1990.

This letter was directed to the Rossakis and admittedly was received by them. In the letter, NUS stated that it found limited soil contamination with little likelihood of contact with groundwater and, consequently, suggested that remediation was not required. Sub ¹⁶ sequently, NUS was asked to provide a cost estimate for remediation, which it did while reiterating its opinion that remediation was environmentally unnecessary. In early January, at the request of the Rossakis’ lender, soil was removed from the northeast corner of the property.

NUS then tested the site of removal and reported to the Rossakis that the contaminated soil had been removed from the site by the current owner. The Rossakis’ lender approved the financing and the parties settled on February 1, 1991. The Rossakis thereafter terminated Amoco’s lease and Abie’s sublease and entered into negotiations with Mobil Oil Corporation (“Mobil”) to lease the property to Mobil to operate a gasoline station and convenience store. Mobil performed its own environmental assessment of the property.

The preliminary results of that assessment in May 1991 and the final results in August 1991 revealed severe, widespread contamination of soil and groundwater. Based on the results of that assessment, Mobil refused to lease the property. On February 25, 1994, the Rossakis filed a complaint in the Circuit Court for Montgomery County against various parties. Subsequent to a ruling on various motions, the Rossakis filed an amended complaint asserting, to the extent here pertinent, a private cause of action under Env. art., § 4-409(a) against Auto Clean and Able and negligent misrepresentation against NUS.

The trial court granted the motion to dismiss the amended complaint, filed by Auto Clean and Able, for failure to state a claim upon which relief can be granted. The negligent misrepresentation claim against NUS was tried, resulting in a jury verdict in favor of NUS. By special verdict form, the jury found that the Rossakis had proven their claim of negligent misrepresentation against NUS but also found that NUS had proven that the Rossakis were contributorily negligent. The Rossakis filed a motion for a new trial and, after it was denied, noted an appeal to this Court.

Questions Presented Appellant presents the following questions: ¹⁷ I. Whether the lower court erred in dismissing with prejudice the Rossakis’ claims under Section 4-401, et seq. of the Environment Article of the Annotated Code of Maryland (1996 Repl-Yol.).

II

Whether the jury’s verdicts with regard to negligent misrepresentation and contributory negligence are inherently inconsistent.

III

Whether the Rossakis had a duty to otherwise investigate NUS’ representations. Appellees phrase the questions differently, but the essence is the same, except that appellees, Auto Clean and Able, also inquire as to whether, even assuming that § 4-409(a) does create a private cause of action, the Rossakis’ allegations are sufficient to state a claim. Finally, Auto Clean and Able inquire as to whether the Rossakis filed suit within the applicable period of limitations. Discussion A. Availability of Private Cause of Action Under § 4-409(a) The Rossakis, relying primarily on the plain language of § 4-409(a) of the Environment Article and the definitions of certain of its terms, conclude that the statute creates a private cause of action under the facts of this case.

The Rossakis further argue that legislative history is consistent with the plain language and, finally, they rely on Board of Education of Prince George’s County v. Mayor and, Council of Riverdale, 320 Md. 384 , 578 A.2d 207 (1990), as authority for the proposition that the Court of Appeals has recognized a private cause of action under the statute. Auto Clean and Able assert that § 4-409(a) must be read in harmony with the entire statutory scheme, which is to protect the waters of the State. Enforcement is the responsibility of the Department of Environment, § 4-402, and the Attorney General, § 4-502. Auto Clean and Able also point to § 4-403 as evidence of express legislative intent not to change the ¹⁸ common law.

In this case, there is no common law action by the Rossakis against Auto Clean and Able. The Rossakis asserted causes of action based on nuisance, negligence, and strict liability, but they were dismissed on motion. Those issues were not appealed and are not before us. Auto Clean and Able also point out that the State statute is modelled on the Federal Water Pollution Control Act, which does not contain a private cause of action.

The enforcement mechanisms are similar in both acts, including a provision for penalties. See Environment art., § 4-417. They contend that there is no express private cause of action in the Maryland statute, and there is no citizen suit protection, as is contained in the Federal Water Pollution Control Act. Auto Clean and Able also rely on the legislative history of the State statute to support their position.

Alternatively, Auto Clean and Able argue that the Rossakis failed adequately to allege a cause of action and, specifically, that they failed to allege a discharge that has or will reach state waters. Finally, Auto Clean and Able argue that the Rossakis’ action is barred by the three-year statute of limitations. They assert that discharges, if any, must have occurred before the deed was executed on February 1, 1991. Applying the discovery rule, the Rossakis should have known of their claims by no later than that date.

We begin our analysis by setting forth the standard of review. In considering a motion to dismiss for failure to state a claim under Rule 2-322(b)(2), a court must assume the truth of all well pleaded facts and all inferences that can reasonably be drawn from them. Hrehorovich v. Harbor Hospital, 93 Md.App. 772, 781 , 614 A.2d 1021 (1992), cert. denied, 330 Md. 319 , 624 A.2d 490 (1993). When reviewing the grant of a motion to dismiss, we must determine whether the trial court was legally correct.

Id. at 785, 614 A.2d 1021 . “The grant of a motion to dismiss is proper if the complaint does not disclose, on its face, a legally sufficient cause of action.” Id. See also Lubore v. RPM Associates, Inc., 109 ¹⁹ Md.App. 312, 322, 674 A.2d 547 , cert. denied, 343 Md. 565 , 683 A.2d 177 (1996). Preliminarily, we note our disagreement with appellants’ assertion that the Court of Appeals recognized a private cause of action under Subtitle 4 in the case of Mayor and Council of Riverdale, supra. That case did not present the issue of whether a private cause of action is created by § 4-409(a), and does not aid our analysis of the issue.

In any event, we need not reach the issue of whether § 4-409(a) creates a private cause of action applicable in certain circumstances because, even assuming that it does, we hold that it does not protect a purchaser of property that was damaged by oil spillage prior to the time of purchase. In the case of Rosenblatt v. Exxon, 335 Md. 58 , 642 A.2d 180 (1994), the Court of Appeals held that an occupier of commercial property may not maintain actions for strict liability, negligence, trespass, or nuisance against a prior occupier of the property for gasoline contamination of the property. The plaintiff in that case had entered into a lease agreement for commercial property for the purpose of opening and operating an automotive lubrication business. The lease agreement provided that the plaintiff was accepting the property “as is.” Further, the plaintiff was aware at the time he entered into the lease that the property had been used as a gasoline station.

In preparing for the construction of his business, the plaintiff hired a testing company to perform a geotechnical study of the property to identify potential construction problems. In its geotechnical report, the testing company noted the presence of a very strong hydocarbon odor in soil and groundwater samples and recommended that a separate environmental study be performed. Based on environmental testing, it ultimately was determined that there was extensive petroleum contamination of the soil and groundwater on the property, and the plaintiff was unable to obtain the financing necessary to start his business. The plaintiff maintained claims for strict liability, negligence, trespass and nuisance against Exxon, the ²⁰ former tenant of the property, for economic damages, including expenses incurred as a result of the contamination and lost future profits from his planned business.

The Court of Appeals upheld the circuit court’s grant of summary judgment in favor of Exxon. The Court first traced the history of each of the torts and noted that, heretofore, they had protected only owners or occupiers of neighboring land from contamination of hazardous substances. Traditionally, there was no duty placed upon an owner or occupier of land to protect his own land from contamination. The Court refused to extend the torts to give a cause of action to subsequent occupants of contaminated land.

Distinguishing between occupants of neighboring land and subsequent users of land, the Court noted: When an owner or occupier of land engages in activities which are related to such ownership and occupation and which are abnormally dangerous in relation to the particular site, we place upon the actor the burden of bearing the risk of any harm to neighbors which arises from the activity, notwithstanding the absence of fault on the part of the actor. This burden is justified when weighing the rights of the actor, who benefits from the activity, against those of the occupants of neighboring land, who do not benefit and have no way of avoiding the harm to their property that may result from a dangerous activity on adjacent land. Subsequent users, however, are able to avoid the harm completely by inspecting the property prior to purchasing or leasing it. Thus, it is not unreasonable to expect subsequent users to bear the risk of such harm. [Footnote omitted.] We think,