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New Jersey Supreme Court Examines Nuisance and Trespass Regarding Leaking UST, Rules Out Suit Against Neighbor’s Insurance Carrier

On August 6, 2015, the New Jersey Supreme Court decided Ross v. Lowitz,Nos. A-101 September Term 2013, 074200. The Court’s opinion sheds some light on the state of New Jersey nuisance and trespass law. Yet it also raises some important questions about what a Plaintiff alleging environmental contamination and seeking tort damages must prove in terms of the Defendants’ acts and omissions leading up to and following a discharge.

The case began with claims by homeowners John and Pamela Ross regarding alleged damages to their property resulting from their neighbors’ leaking underground storage tank (“UST”), used for storage of home heating oil. Among other parties, the Rosses sued two former owners of the property with the UST, asserting claims of (1) negligence, (2) strict liability, (3) private nuisance, (4) trespass, and (5) violations of the Spill Compensation and Control Act (the “Spill Act”), N.J.S.A. 58:10-23.11 to -23.24. They also sued the homeowners’ insurance carriers for nuisance, trespass, and breach of the implied covenant of good faith and fair dealing. However, the trial court granted summary judgment against the Plaintiffs and the Appellate Division affirmed, citing the fact that Plaintiffs failed to provide any proof of fault or abnormally dangerous conduct by the property owners. Plaintiffs also had no direct right to pursue their neighbors’ insurance company.

On appeal to the high court, the Plaintiffs took issue with the lower courts’ reading of New Jersey nuisance and trespass causes of action as requiring some proof of negligence, recklessness, intentionality, or abnormally dangerous activity under Restatement (Second) of Torts, Section 822. Instead, they argued, the “continued presence of oil” migrating from the UST and defendants’ “failure to act” made defendants liable under the Restatement (Second) of Torts, Section 824, which provides that an actor may be liable for private nuisance by reason of “an act” or “a failure to act” in circumstances in which it is under a duty to do so. Ross, at slip op. at 17-18. However, rejecting Plaintiffs’ arguments, the Court affirmed and agreed with the Appellate Division that the record lacked any evidence of defendants’ fault for the invasion, and that this indeed undermined Plaintiffs’ claims.

The Court’s opinion provides important clarity on the interplay between several sections of the Restatement regarding both nuisance and trespass claims. Additionally, for Plaintiffs and their attorneys, it confirms the importance of a plaintiff’s status in relationship to any policy of insurance under which it seeks relief.

First, the Court’s opinion suggests that all private nuisance claimants must meet the standard in Section 822. The defendants’ conduct must be “intentional and unreasonable,” or, if unintentional, either negligent or reckless, or the result of some “abnormally dangerous conduct.” Id. at 17-19. Even though Section 824 states that a claim for nuisance may result from a defendant’s “affirmative act[s]” and “failure[s] to act in circumstances in which defendant has a duty,” that Section does not create an independent cause of action relieving the plaintiffs of the requirements of Section 822. Id. at 18-19. Plaintiff must still prove defendants’ negligence, recklessness, intentionality, or engagement in an abnormally dangerous activity. Id. The Court also indicated that while Section 839 of the Restatement clarifies the private nuisance standard for failure to abate an artificial condition, that Section does not lower the bar to liability either. Plaintiffs must still allege and ultimately prove some action by the defendant that is “otherwise actionable” under Section 822. Id. at 19-20.

Second, the Court’s opinion strongly implies that the presence of a UST for home heating oil on a property does not constitute an “abnormally dangerous activity” by the property owner that could subject the owner to private nuisance liability. The Court examined Defendants’ alleged conduct, and found it did not to support allegations of fault, or any other basis for the nuisance claim. Id. at 23-24.

Third, the Court offered guidance to parties pursuing trespass claims under Restatement Sections 158, 161, and/or 165, and indicated that, like nuisance, trespass requires a “tortious” act—one that is “intentional, negligent, or abnormally dangerous.” Id. at 21.

Finally, the Court clarified the scope of an insurer’s possible liability to a neighboring homeowner, holding that only the direct or intended third party beneficiaries of a policy have a claim against the insurers. Id. at 27-28. So long as the Plaintiffs were not the intended third party beneficiaries to the insurance policy at issue, in the absence of an assignment, there was no direct cause of action. Id.

This decision makes clear that parties considering tort causes of action for migration of fuel oil should carefully review their factual allegations before filing UST litigations alleging common law causes of action. The attorneys at Lieberman Blecher & Sinkevich handle a wide variety of Underground Storage Tank matters and can help guide you through the regulatory process and litigation.

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